The weakening of US dollar can turn Central banks to currencies
We are a hundred dollar bills.
Nurphoto | Nurphoto | Getty pictures
The ripple effect of the dollar and other currencies confused relief and headaches to the central banks of the world.
Uncertainty about the US policy prisoner caused a flight from US dollars and treasures in recent weeks, this year is weaker than 9% this year. Sunday watchers see more decreasing.
According to American Latest Global Foundation Manager, 61% of participants are waiting for 61% of the decline in dollars in the next 12 months – the most pessimistic worldview of large investors for almost 20 years.
This Out of US assets As the dollar weakens, it can reflect a wider confidence crisis as potential sheds such as more imported inflation.
Most central banks will be pleased to see that 10% -20% in US dollars.
Adam button
Forexlive General Currency
Greenback dropped other currencies to assess it, especially Japanese Yen, Swiss Franc and other currencies to provide safe air as the euro.
Since the beginning of the year, Japan has strengthened more than 10% against GreenBack, and the Swiss franc was appreciated by LSEX, about 11% highly appreciated.
In addition to secure aircraft, in addition to other currencies that are strengthened against the dollar, the Mexican peso includes Canadian dollars that value more than 5.5% and 4% against the dollar. The Polish ZLOTI was more than 9%, and rated more than 22% of the Russian ruble against greening.
Some developing market currencies, despite the weakness of the greenery, were impaired.
Vietnamese Dongu and Indonesian Rupia reached a record level in the early US dollar. The Turkish pound always reached down last week. Chinese Yuan hit a record low in a record of the dollar returning for about two weeks, but strengthened.
Breathing grass to cut prices?
The weakening of US dollars, except as the Swiss National Bank, the analysts are a relief of US dollars, governments and central banks.
“Most central banks will be pleased to see 10% -20% reduction in US dollars,” the man’s button, General Currency Analyst in Forexlive. Added that dollar power has been a durable problem for years and makes it difficult for countries with hard and soft dollars.
A large dollar reduces a weak dollar load with a large dollar denominated market country. In addition, a softer greenback and strong local currency imports allow you to reduce prices to increase relatively cheaper, discount and thus the growth of central banks.
The sale of the last US dollar offers “breathing room” to reduce the “breath room” offers for central banks.
Dollar index in last year
Although a strong local currency could help touch inflation with cheaper imports, this is the largest manufacturer of Asia as the largest goods manufacturer in Asia, VP Bank has co-chairs for the investment officer.
Currency devaluation, especially in Asia, especially in Asia, is likely to be more active disagreement in Asia, the head of the macro study in Monex Europe Nick Rees.
However, these developed markets and Asian central banks will have to take a fine line to avoid capital flights and other risks.
“Developing markets are facing high inflation, debt and capital flight risks, the devaluation is dangerous,” said Wael Makarem, the financial markets are leading the property.
In addition, the devaluation may be seen as a trade event in revenge by the US government.
The developing market economies may not want to assess the debt burden of domestic households and firms borrowed in US dollars and US dollars, Fitch Ratings’ Economy Director Alex Muscatelli. A weak domestic currency can also lead to capital flows in response to the differentials of interest in the United States.
For example, Muscatelli said that the central bank of the Central Bank of Indonesia could be a place for the cutting rates of Korea and India, taking into account the large number of currency volatility.
So far, the selected action is to avoid a currency war that will only add more instability to the local and global economy.
Brendan mckenna
Wells Fargo
The European Central Bank has taken the opportunity to reduce inflation and reduced the ratios with more than 25 main points in the April session. On Thursday, the ECB “Shows that most of the main measures of the main inflation will be resolved in a sustainable range of 2% medium-term target of the inflation Management Council.”
Another example is the Swiss National Bank, which has been facing a large number of strong francs in the last 15 years. Export of goods and services The Swiss is more than 75% of GDP And a strong Frank Swiss goods are more expensive abroad.
“If capital continues to flow, there may be acute measures for the devaluation,” he said. Investors, as in recent weeks, strengthened the franc and carried it in the franch.
Central banks evade the devaluation – so far
Currency devaluation will be cautious from inflation, which is superior to the risks that violate the risk of price growth and the risk of monetary bodies.
The currency depreciation, as well as the higher inflation, which is higher than the tariffs, is likely to respond to US assets, probably the need to go through voluntary devaluation of central banks.
On top of that, most foreign central banks have bandwidth to theoretically, which is still less likely to weaken its currencies, which is still less likely to have a strategist.
The failure to devalue the currency of a country is affected by several factors: the size of its FX reserves, external debts, trade balance and imported inflation sensitivity.
Swiss franc performance in the last year
“Export-oriented countries will take a lot of reserve and foreign debt, more space for Devalve – but even these are likely to walk carefully,” McKenna said.
The wider aspect of trade talks will be the key to how to move countries. Aside from China, several countries demonstrated the desire to deal with trade talks, and if these talks are low tariffs, central banks are likely to continue more weak currencies.
In the existing geopolitical climate, the Devaluation can also invite the charges and risks of exchange manipulation, VP Bank said Rupf.
There is still a possibility that trading tensions can lead to more protection of more provises to the perverse of central banks currencies.
“But so far, the selected action is the avoidance of a foreign exchange war, which will add more instability to the local and global economy,” McKenna said.
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