Lira Rallies as Turkey stuns with biggest rate hike in years
The central bank raises benchmark rate by 750 basis points. Turkish currency surges more than 5% against the dollar. The Monetary Policy Committee, under Governor Hafize Gaye Erkan, raised the benchmark one-week repo rate to 25% from 17.5%, the sharpest increase since 2018. Most economists polled by Bloomberg predicted a hike to 20%. It’s the latest indication that Turkey’s new administration is prepared to move away from the unorthodox policies — including ultra-loose borrowing costs — that were championed by President Recep Tayyip Erdogan but caused foreign traders to flee the country’s bond and stock markets en masse. Source: Bloomberg
Major reserve currencies since 1250
by James Eagle
The PBoC is putting more measures in place to slow the depreciation trend in the yuan
Overnight, the Chinese central bank set its yuan fixing at 7.2006 per dollar compared to the average estimate of 7.3047. The gap - an unprecedented 1,041 pips - was the largest gap to estimates since the poll was initiated in 2018. Source: Bloomberg, zerohedge
Unprecedented times in Argentina
- On Monday, Argentina’s central bank raised interest rates to 118%. - Forex: you now get a record 350 Argentine Pesos for each US Dollar. - Argentina 30-year mortgage is now at a record 82.2%. - For the first time since 1991, their inflation rate is above 100%. Source: The Kobeissi Letter
Russia’s central bank raises its key interest rate to 12% from 8.5% at an emergency meeting called after the Ruble crashed
The Ruble is recovering somewhat after its collapse, and now costs more than a penny again. Trades at 98 per Dollar. Source: HolgerZ, Bloomberg
Argentine Peso having a rough day. An 18% devaluation to 350 pesos per dollar (chart) accompanied by a 21 percentage point hike in interest rates to 118% …
Source: Barchart
The Euro is now overvalued against the Dollar for the 1st time in 2 years, says the Big Mac index.
Source: The Economist
China's currency regulators are asking some commercial banks to reduce or postpone their purchases of U.S. dollars
That is in order to slow the yuan's depreciation, two people with direct knowledge of the matter said. The informal instruction, or the so-called window guidance, is the latest in a series of steps taken by authorities this year to bolster a currency that has been hit by China's faltering post-pandemic economic recovery and rising yields for the U.S. dollar and other major currencies. Source: Reuters
