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Commerzbank’s Michael Pfister and Norman Liebke describe how Swedish government tax and fuel measures have temporarily suppressed inflation, keeping the Riksbank on hold at 1.75% with hikes only expected late in the year. As fuel subsidies expire and counterfactual inflation already hovers near 2%, they see good reasons for a year‑end rate increase, while questioning market pricing of roughly 120bp hikes over 12 months.Temporary measures mask price risks”Unlike Norges Bank, the Riksbank did not issue any hawkish statements yesterday. The key interest rate was left unchanged at 1.75%, with the first rate hike not expected until the end of the…
The rupee closed modestly stronger on Friday, aided by an easing in oil prices and the dollar after a searing rally in both kept up the pressure on the local currency through the week, eliciting central bank interventions to avert sharp falls.The rupee closed at 95.8125 per dollar, up slightly from its close at 95.9550 in the previous session. The currency was little changed on the week.Oil prices fell about 2% on Friday, though remained north of $100 per barrel as investors weighed attacks against Saudi Arabia by Houthi fighters against the possibility a truce between the US and Iran…
The rupee’s movement over the past four years has reflected a mix of fundamentals, Reserve Bank of India intervention and market sentiment, making it difficult to attribute currency moves to any single factor, according to a report titled ‘What drives the exchange rate?’ by Bank of Baroda.Since the eruption of the Ukraine war in 2022, the rupee has moved from an average of Rs 74.44 per dollar in January 2022 to an average of Rs 95.47 per dollar in August 2026, a depreciation of around 28%.AgenciesThe movement has come amid varying trends across major currencies. During the same period, the…
Standard Chartered’s Christopher Graham examines whether the Bank of England will feel pressured to follow the Federal Reserve’s September rate hike. He notes that Fed tightening alone does not force the BoE to act and stresses the role of UK data and market credibility. Historical evidence shows increased policy convergence, but past cycles demonstrate that BoE moves are not automatic.Fed move and BoE policy sensitivity”The FOMC raised its policy rates by 25bps on 16 September, its first hike since August 2023. The next day the Bank of England (BoE) held its policy rate at 3.75%, unchanged since late last year.…
The rupee gained 14 paise 95.85 against the US dollar in early trade on Friday amid a positive trend in domestic equities and remained above the key psychological barrier of 96 per dollar.Forex traders said persistent dollar demand from domestic importers in particular the oil companies, elevated crude oil prices, and broad-based strength in the US dollar index following hawkish Federal Reserve rate signals weighing on the local unit.However, the Reserve Bank of India is likely to intervene to smooth out volatility in the currency market, they said.At the interbank foreign exchange market, the rupee opened at 95.92 against the…
Gold (XAU/USD) struggles to capitalize on a modest Asian session uptick on Friday and languishes near the weekly low, touched the previous day amid a bearish fundamental backdrop. The US Dollar (USD) pauses for a breather following the recent strong rally to a nearly two-month high and turns out to be a key factor offering some support to the commodity. However, the US Federal Reserve’s (Fed) hawkish outlook, elevated US bond yields, and persistent geopolitical uncertainties favor USD bulls. This, in turn, keeps the precious metal below the $4,300 mark.Fed speakers have given more hawkish signals following the September rate…
Traders said RBI likely intervened to shore up the rupee at a time when trading liquidity is low, helping the intervention have a magnified impact. | Photo Credit: FRANCIS MASCARENHAS India’s central bank likely sold dollars before the local spot market opened on Friday, four traders told Reuters, helping the rupee hold stronger than the key psychological 96-per-dollar level.The rupee rose to 95.88 per dollar on the interbank order-matching system, paring its decline from 95.97 in early deals.Traders said the central bank likely intervened to shore up the rupee at a time when trading liquidity is low, helping the intervention…
Chinese President Xi Jinping stated during his visit to Washington that Beijing and Washington must find a proper way to coexist peacefully and act as partners rather than rivals, the Financial Times reported on Thursday.Xinhua news agency reported that Trump and Xi confirmed that they would support each other in hosting the APEC Economic Leaders meeting and the G20 Summit in 2026.Key quotesChina and the United States . . . stand to gain from co-operation and will both lose in confrontation. Our competition should be a healthy one, and should be kept within bounds. It should be a race of catching up with…
NZD/USD trades around 0.5655 at the time of writing on Thursday, down 0.30% on the day. However, the pair limits its losses as the New Zealand Dollar (NZD) benefits from a sharp increase in expectations of further monetary tightening by the Reserve Bank of New Zealand (RBNZ).Markets now price in around an 87% chance of a third RBNZ rate hike in October, compared with just 20% earlier this month. This rapid repricing of the monetary policy outlook provides support to the Kiwi, even as the broader market environment remains favorable to the US Dollar (USD).Expectations of further tightening in New…
The Indian currency closed 22 paise weaker to 95.96 a dollar Thursday on heavy dollar demand from importers and concerns over Brent crude rising to $104 a barrel again.Traders said that the Reserve Bank of India was seen in the market selling dollars through government-owned banks to prevent further weakening of the rupee beyond the 96 level.Opening the day 9 paise weaker at 95.83 as against the previous close of 95.74, the local currency continued to be under pressure amid a surge in global bond yields. The fresh tension between US and Iran fuelled anticipation of rising inflation and further…