South Africa Leaves Interest Rates at 8.25%, Rand Falls Rallies with Delayed Rate Cuts

The South African Reserve Bank (SARB) kept its benchmark repo interest rate at 8.25% at its January 25th, 2024, meting as widely anticipated. Rates remain at their highest since 2009. The bank highlighted the persistence of inflation risks while emphasizing a balanced evaluation of risks to medium-term growth. The SARB noted that the return of inflation to the target has been slow, despite the expected gradual moderation. Headline inflation fell for a second month to 5.1% in December from 5.5% … Continue reading “South Africa Leaves Interest Rates at 8.25%, Rand Falls Rallies with Delayed Rate Cuts”

Central Bank of Turkey Raises Another 250 bps to 45%, Signaled End of Rate Hikes

The Central Bank of Turkey hiked by another 250bps from 42.5 percent to 45 percent as expected. It also signaled the end of rate hikes by stating “that the monetary tightness required to establish the disinflation course is achieved and that this level will be maintained as long as needed.” This was consistent with expectations this would be the final hike after the central bank said at its last decision in December that the goal was to “complete the tightening … Continue reading “Central Bank of Turkey Raises Another 250 bps to 45%, Signaled End of Rate Hikes”

Central Bank of Turkey Raises Rates By 250 bps to 42.50%, Up 35% since May

The Central Bank of Turkey hiked rates by another 250bps from 40 percent to 42.5 percent at its December meeting. The bank said headline inflation edged up in November and remains in line with the outlook presented in the most recent Inflation Report. The existing level of domestic demand, stickiness in services inflation, and geopolitical risks keep inflation pressures alive. The move follows a hike of 500bps at its November meeting. The move was its seventh big interest rate hike … Continue reading “Central Bank of Turkey Raises Rates By 250 bps to 42.50%, Up 35% since May”

Russian Central Bank Hikes Interest Rate to 16% as Wartime Inflation Pressures Mount

Russia’s Central Bank (CBR) in a fight to arrest inflation and the fall of the plummeting Rouble hiked 100bps Friday morning to 16 percent, for the fifth consecutive time since summer to fight accelerating inflation. The Russian economy has been smashed but is said to be recovering on impacts from the invasion of Ukraine by scarcity and falling currency pushing up prices paid. The CBR has now raised its key rate by a cumulative 850 basis points since July, including … Continue reading “Russian Central Bank Hikes Interest Rate to 16% as Wartime Inflation Pressures Mount”

Central Bank of Turkey Raises Rates By 500 bps to 40% with Inflation Stuck at Over 60%

The Central Bank of Turkey hiked by another 500bps, double the consensus, to a new one-week repo rate of 40% at its November meeting. The move was its sixth big interest rate hike in a row as inflation hit 61.36% last month. The weak lira responded minimally, gaining a little but underperforming against most EM crosses and several major ones. The currency response had much to do with the central bank indicating it would keep tightening but at a slower … Continue reading “Central Bank of Turkey Raises Rates By 500 bps to 40% with Inflation Stuck at Over 60%”

Central Bank of Turkey Raises Rates By 500 bps to 30%, Lira Continues to Weaken

The Central Bank of Turkey hiked by 500bps to 30% at its September meeting. It has been raised by 22.5% since May. The lira was weaker in response and has been selling off throughout the hiking campaign. Turkey remains in the clutches of a currency crisis after President Erdogan destroyed its credibility. The central bank said it was prepared to take further aggressive action on interest rates, with the CPI annual rate 59% in August. “Monetary tightening will be further … Continue reading “Central Bank of Turkey Raises Rates By 500 bps to 30%, Lira Continues to Weaken”

Hong Kong’s Monetary Authority Keeps Rates in Lockstep with Fed at 16 Year High 5.75%

The Hong Kong Monetary Authority (HKMA), Hong Kong’s de-facto central bank, left its base rate charged through the overnight discount window unchanged at 5.75%, tracking action by the U.S. Federal Reserve. The latest move kept borrowing costs in the city to the highest level since January 2008. Hong Kong raises rates in line with the Fed due to the Hong Kong Dollar’s peg to the US Dollar. Immediately after the announcement the Hong Kong’s one-month interbank offered rate (Hibor) soared … Continue reading “Hong Kong’s Monetary Authority Keeps Rates in Lockstep with Fed at 16 Year High 5.75%”

Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore

The Australian Dollar was the best performer of the week, buoyed by improving sentiment in commodities, iron ore hit a five-week high and oil prices YTD highs with hopes for a Chinese economy rebound. The New Zealand Dollar pulled along with it. The US dollar rally was tested this week and ultimately again benefiting from safe haven and yield chasing flows proved its resilience after rebuffing earlier selling. The Dollar Index bounced off 102.84 to close the week at 104.23. … Continue reading “Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore”

Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. Fed Chair Jerome Powell’s remarks at Jackson Hole renewed commitment to combating inflation prompted traders to elevate their expectations for another rate hike within the year. The yen fell to ¥146.6 per dollar after Jay Powell’s speech at one point. That was the lowest level against the dollar since November on Friday, pressuring the … Continue reading “Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows”

Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies again under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as the Turkish Lira hits another all-time low and the imploding Chinese recovery impacts the Yuan. The only currency the US … Continue reading “Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further”