Forex: Currency survived a five-day storm
In the trading and diplomatic wars, weekly, expanding their habitat, Turkey took the decision to increase duties on imports from the United States, including tobacco, alcohol and cars – a total in aggregate more than 20 types of imported products. Among proceno, alcohol duties, it was decided to increase by 140%, on passenger cars is 120%, tobacco 60% on cosmetics and perfumes – up to 60%, for rice 50%, etc.
Although a full (and long overdue) correction in the U.S. dollar is not observed at this stage halted his dynamic strengthening. The main question now sounds so: whether there will be concerns about Turkey continue to have an impact on the currencies of other countries. Unit of developing countries, including Argentina, Mexico, South Africa and Indonesia, in the last episode showed a unanimous weakness, while the main beneficiaries of this process were the US dollar and the Japanese yen.
As a consequence the “five-day currency wars”, the dollar also rose significantly against the Euro (current exchange rate of the Euro at 12:30 GMT is just 1,1326 – so the Euro is, apparently, follows the principle of “late start – late finish!”). Currency traders try to understand what countries have the highest business involvement or affinity with Turkey, whose currency has fallen since the beginning of the current year to 64% as the country’s Central Bank followed the call of President Recep Tayyip Erdogan, preferring not to slow growth, raising interest rates, and with a focus on curbing inflation, which, by the way, Turkey has a distinct seasonal cycle.
In this sense, Russia and Turkey went last year toe-to-toe, and it can be considered as an additional explanation to the fact that during the current round of sales of “soft” currency that is Lira and the ruble has suffered the greatest losses.
Summing up the interim, what has happened over the past week in the global foreign exchange markets and trying to take their first lessons it should be noted that although synchrony and correlation of the fall of the “soft” currencies were traced from the beginning to the end of the described episode, not all of them the same prospects and vulnerability to face similar scenarios in the future. Thus, economies with large current-account deficits of the operations – such as India, Argentina and South Africa, will experience increased economic pressure as the U.S. Federal reserve, apparently, at least until the end of this year will continue to tighten monetary policy.
As of 12:30 GMT, the ruble continues a slow recovery against the dollar (66,83 rubles per dollar), and more noticeable in tandem with the Euro (75,72). Interestingly, the result of “infection” caught from the Lira and the ruble weakening has gained significant momentum in the Polish zloty, which is losing today with the opening of almost 0.6% to 3,813 zlotys per dollar, Swedish Krona (drop from the start of trading in Europe 0.45% to 9,181 CZK per USD) and the Hungarian Forint (reduced from the start of trading in Europe of 0.3% to 285,45 forints to the dollar).
“International financial center”