Exchange rate
Don’t underestimate East Africa’s potential, says Sarb deputy
Eastern region of the continent benefitting from slower inflation and improved regulatory regime, Mminele says; “strict” fiscal discipline must be applied throughout the region
Fiscal policies the answer to commodity decline in Africa – BIS paper
Counter-cyclical policies have done all that they can, paper says, adding it is now time for exchange rate and fiscal policies to bear the burden and spur growth
IMF: rise of non-banks is reshaping policy transmission
Pass-through of monetary policy grows as non-banks become more important, but changed transmission mechanism demands better data to understand risk-taking channel
BoE’s Salmon warns forex industry on adherence
Chris Salmon, the Bank of England's executive director for markets and lead on global code adherence, says regulation could be on the horizon as soon as 2020 if market participants don't adhere to the new Global Code
Declining inflation reduces pass-through effects for emerging markets – BIS paper
Central banks should be less fearful of floating their exchange rates; emerging markets should take note exchange rate channel could be “less effective” in affecting inflation
Markets back under central bank ‘sway’ – BIS quarterly review
Recent equity rally is “more stick than carrot”, says Claudio Borio, as latest report points to fresh signs of discomfort among banks and continued market distortions
Eurozone exchange rate pass-through has declined over time – researcher
Italian exchange rate pass-through has behaved very differently from other major eurozone economies – particularly Germany’s – paper finds
PBoC faces the ‘most challenging work of all central banks’ – HKU’s Xiao
The People’s Bank of China needs to meet short-term goals of exchange rate and price stability to achieve longer-term structural and financial reform, says Hong Kong University professor Xiao Geng
Kganyago justifies Sarb’s response to ‘troubling mix’ of issues
Sarb governor says the public should be “satisfied” but not “happy” with the current economic outlook, given that monetary policy has only offset some of the problems causing high inflation
Volatility in virtual currencies will not deter usage – new research
Model implies exchange rate will become less volatile as virtual currency becomes more established, questioning idea that volatility will impede use
HKMA researchers dig into persistent covered interest parity deviation
Authors posit forex swap dealers filter out counterparty risk from money market rates when setting swap prices; risk adjustment continues even in non-stressed periods
The Chinese G20 presidency may mark a turning point
Mark Uzan defends the oft-criticised G20 communiqué, arguing the Chinese presidency of the global group has created genuine progress
BIS survey points to turnaround in global forex volumes
Latest survey suggests more than a decade of growth may have come to an end, as data points to a restructuring away from spot trades towards derivatives
Inflation to fluctuate around bottom of target range, Botswanan report says
Mid-term review paints optimistic picture for inflation in Botswana; loose monetary conditions to contribute to growth in economic activity
RBNZ better at forecasting growth and inflation than exchange rate, notes study
Economists compare judgement-based forecasts with benchmark set by suite of statistical models, finding judgement tends to work well, but both types of forecast struggle with exchange rates
China to create own version of FX code
A newly established Chinese FX Committee is working on creating a Chinese version of the Global Code of Conduct, for domestic and foreign banks operating in the onshore market
Regulation may be fuelling covered interest parity breakdown – BoJ economists
Authors link puzzling breakdown of CIP to regulations including liquidity constraints, as well as divergent monetary policies
Menon pledges tougher measures on AML controls in Singapore
Ravi Menon says central bank will conduct more intrusive probes of higher-risk institutions and take stronger actions where practices fall short; monetary policy likely on hold for 2016
Turkish central bank steps in to calm markets in wake of coup attempt
Central bank promises banks unlimited liquidity as failed coup sends shockwaves through markets; economists say banking sector is holding up so far but has some vulnerabilities
Colombian paper explores forex intervention announcements
In present of imperfect credibility it is not possible for central banks to achieve ‘desired’ exchange rate level without changing international reserve position, paper finds
Mexico hikes rates to stabilise peso depreciation
Bank of Mexico surprises markets with 50bp hike to stem currency depreciation; analysts see global risk factors contributing to exchange rate developments
Analysts see intervention challenge for central banks
Following the fallout of EU referendum result, central banks step in to stabilise currency movements; analysts expect volatility to continue, but see challenges to intervention
SNB paper challenges idea that capital flows drive Swiss franc value
Empirical study finds no strong relationship between capital flows and the level of the franc, meshing with earlier literature showing asset prices can move sharply without major portfolio shifts
External factors most important inflation driver, Mauritius survey shows
Inflation expectation shows 71% of stakeholders asked believe external environment is most important factor in inflation pattern; exchange rate viewed as second most important