CURRENCIES | Dealing With Divergence
Central Banks Continue To Ease
Last month, major central banks released
their policy statement and most of them
continued to remain on the easing path
following volatility in the emerging
markets that has weighed on the global
growth. Starting with the ECB, the central
bank lowered its benchmark rate to zero
and also lowered its deposit rate further
3 Months Spot Price Return
10
(18-Dec-2015 to 17-Mar-2016)
8.80
8
7.60
5.70
2.60 2.40 2.40 2.40
2
in January as it stepped up its efforts to
revive growth and pull Japan out of years
of deflation.
In line with expectation in its March
meeting, the Fed decided to hold after
raising rates in December for the first time
since 2006. The greenback came under
pressure against its major crosses after the
Fed lowered its forecast for growth and
Last month, major central banks released their
policy statement and most of them continued to
remain on the easing path following volatility in
the emerging markets that has weighed on the
global growth
into the negative territory. In line with
expectation, the central bank lowered its
deposit rate to (-) 0.40% from (-) 0.30%
and at the same time expanded its
quantitative easing to €80 billion from €60
billion. The ECB also lowered its forecast
for growth and inflation suggest that the
steps taken previously by the central bank
have not been as effective as expected
previously. After the announcement the
euro came under pressure against the
dollar but despite the increase in QE the
euro rebounded from its low.
On the other hand, Bank of Japan
continues to hold rates near record lows
and in its latest policy meeting the central
bank governor hinted towards further rate
cut in a view to support the economy