Exchange rate
Egypt PM signals move to unify exchange rates
Sherif Ismail tells parliament central bank will soon unify black-market and official rates; IMF moving closer to agreement on funding
Hedging demand can cause covered interest parity violations – BIS paper
US dollar forward hedging demand can cause covered interest parity to fail even when markets are calm, authors say, helping explain this post-2012 anomaly
Public sector balance sheet poses risks for Dominican Republic – paper
IMF working paper analyses balance sheet developments in the South American nation’s economy; foreign currency exposure could amplify risks, authors say
Still room to support domestic economic growth after cut, says Ugandan governor
Exchange rate movements remain key risk to inflation, says Tumusiime-Mutebile, as Bank of Uganda cuts interest rates by 100bps
UK inflation jump to 1% is just ‘tip of the iceberg’
Latest inflation data shows leap from 0.6% in August to 1% in September; former MPC member Sentance says this is just tip of the iceberg
Foreign investment ‘restored’ exchange rates after policy shocks – paper
Data from Colombian central bank shows foreign exchange intervention have “short-lived effects” on prices; over the medium term, foreign capital flows push exchange rate back to original level
Evolution of exchange rate main risk to inflation – Mexican deputy
Electoral uncertainty playing on the minds of policy-makers at Bank of Mexico, says Guzmán Calafell; higher pass-through to prices now more of a risk thanks to peso depreciation
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