Exchange rate
Kuwait joins hikers club in wake of Fed rate rise
Kuwait look to strengthen currency after Fed rate rise; UAE and Saudi Arabia, which operate with dollar pegs, also move
LatAm response to Fed sees two hikes
Mexico and Chile both raise rates by 25bp in the wake of the Fed decision, with currencies remaining relatively stable in the aftermath
Peso down almost 30% as Argentina lifts capital controls
Capital controls lifted allowing greater access to foreign exchange; peso slides by 29% against the US dollar as markets open
Colombian paper explores signals from FX interventions
Interventions in the foreign exchange market act as ‘signals’ to solve co-ordination failure, paper says, suggesting findings can help strategy
New renminbi index shows ‘relative’ strength of currency
Body run by the PBoC publishes index showing movement of renminbi against 13 other currencies; looks to steer market focus away from solely the dollar rate
Central Bank of Armenia says currency turbulence has raised credit risks
Financial stability report says economy has been affected by sharp depreciation of the dram, worsening credit risk as many loans are denominated in US dollars
Argentina’s president elect aims to dismantle complex capital controls
‘Macri-economics’ could consist of unwinding capital controls, boosting export competitiveness and unifying exchange rates, but it will be a challenge, observers say
South African review charts motivations behind resumption of tightening cycle
One of three chief considerations was the path of exchange rate and the risks it posed to inflation, which increased as the year went on
Egypt central bank ‘kept eyes on inflation’ as it devalued currency
Head of risk at Central Bank of Egypt says the institution considered wider impact of devaluations on the economy; staff welcomed new governor last week
Trinidad governor implies $500m injection failed to solve US dollar shortfall
Trinidad and Tobago’s Jwala Rambarran says domestic economy faces ongoing shortfalls of US dollars despite $14 billion in official sector forex assets; calls for diversification in the economy
Sarb raises rate 25bp now to avoid bigger move later
Increasing risk of inflation spurs the South African Reserve Bank to raise its key rate by 25 basis points to 6.25%; two out of six MPC members preferred not to move
Mexico should ‘phase out’ daily FX sales, IMF staff say
Staff at IMF find interventions have ‘contributed to stability’ in the foreign exchange market, while a report following Article IV consultations recommends moving away from daily auctions
Challenging crosscurrents from divergent monetary policy
Divergent monetary policies around the world and challenges linked to China’s economic rebalancing present central bankers with some opportunities as well as numerous threats
Bank of Namibia defends currency deal with Angola
Namibia's central bank addresses stakeholders' concerns over its currency conversion agreement with the National Bank of Angola, including the latter’s ability to buy back kwanza
Information content of capital flows affects exchange rate impact, SNB paper finds
Private information conveyed by different kinds of capital flows affects the impact on the exchange rate, a working paper published by the Swiss National Bank finds
Zambia hikes by 300bp as inflation almost doubles
Bank of Zambia increases policy rate to 15.5% in an effort to keep inflation expectations anchored in single digits; annual inflation jumps to 14.3% in October as kwacha slides
Central Bank of Iceland approves failed bank plans
Central Bank of Iceland approves ‘composition agreements’ by failed banks, offering them the opportunity to duck a heavy stability tax
Swaziland currency drops under Fed decision pressures
Delayed Fed rate rise put pressure on Swaziland lilangeni, central bank says, and more moves are likely
Former Nigerian governor Sanusi attacks current central bank policy
Former governor of the Central Bank of Nigeria Sanusi Lamido Sanusi challenges monetary policy stance of Nigeria’s central bank and calls for a currency devaluation
FOMC minutes spell out inflation concerns
Several members were concerned disinflationary pressure from low oil prices and a strong dollar could persist longer than anticipated and ‘delay or diminish’ the expected rise in inflation
ECB watching oil and euro closely for inflation risks
Deflation has become less likely in the eurozone since the implementation of quantitative easing, but falling oil prices are pressing on inflation expectations, governing council says
European real effective exchange rates are hugely misaligned, paper argues
Real effective exchange rates for European Union countries do not correspond to national economic fundamentals, a working paper from the Bank of Lithuania argues
FSB report finds mixed progress on benchmark reforms
Report welcomes ‘good progress’ on many recommendations, particularly surrounding London fix, but identifies room for improvements
‘Little support’ from data for theories of disconnect between trade and exchange rates, IMF report says
Data largely supports conventional economic wisdom linking movements in trade flows with levels of exchange rates, according to WEO chapter; Japan may be an exception