Turkish lira falls due to massive earthquakes
2023.02.06 07:36
Turkish lira falls due to massive earthquakes
By Ray Johnson
Budrigannews.com – On Monday, the dollar held its value against the euro. Traders believed that the U.S. Federal Reserve would likely raise its benchmark rate above 5% and maintain it there to control inflation after data showed that the labor market remained strong.
Emerging currencies fell to a record low of 18.85 against the dollar as a result of earthquakes in central Turkey and northwest Syria and a strong US dollar.
Investors priced in a slowdown in the pace of rate hikes going forward after the Fed announced on Wednesday that it had reached a turning point in its fight against inflation and raised rates by 25 basis points.
However, investors anticipated that the Fed’s policy rate would reach a peak of 5.05% in June after an eye-popping U.S. nonfarm payrolls number on Friday and a rebound in the services industry in January sent the dollar to a high in the middle of January.
The reached a three-week high of 103.25 against a basket of currencies on Monday, and it remained close to that level at 0926 GMT, rising 0.1 percent to 103.23. On Friday, the index had increased by 1.1%.
Tapas Strickland, head of market economics at National Australia Bank (OTC:), stated, “The worry of course is that the much better-than-expected data is bad news if the Fed sees this as bolstering its case of two more hikes and keeping rates elevated for longer.”
After a U.S. military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday, escalating tensions between the United States and China also contributed to an increase in the safe-haven dollar.
The euro fell 0.2% to $1.0769, nearly three weeks lower than its previous low. The European Central Bank’s announcement on Thursday that it would raise its deposit rate by 50 basis points in March pushed the single currency to a 10-month high.
Robert Holzmann, the head of the Austrian central bank, said on Monday that because inflation in the euro area remained far too high, the risk of the ECB not raising interest rates sufficiently was still greater than the risk of raising them too much.
The newspaper reported, citing unidentified government and ruling party sources, that Bank of Japan Deputy Governor Masayoshi Amamiya was being considered for the position of governor. This led to a decline in the yen.
Yoshihiko Isozaki, Deputy Chief Cabinet Secretary, stated at a news conference on Monday that the Nikkei report was false.
The yen hit a three-week low of 132.60 earlier in the session, putting it 0.5% lower at 131.90 per dollar.
According to Saxo Markets’ strategists, “Amamiya has helped Kuroda on monetary policies since 2013 and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalization could progress under the new chief.”
The loose policy settings of the BOJ have come under increasing fire for distorting market function from a variety of sources, including opposition politicians and traders.
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