Exchange rate
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
Menon pledges tougher measures on AML controls in Singapore
Ravi Menon says central bank will conduct more intrusive probes of higher-risk institutions and take stronger actions where practices fall short; monetary policy likely on hold for 2016
Turkish central bank steps in to calm markets in wake of coup attempt
Central bank promises banks unlimited liquidity as failed coup sends shockwaves through markets; economists say banking sector is holding up so far but has some vulnerabilities
Colombian paper explores forex intervention announcements
In present of imperfect credibility it is not possible for central banks to achieve ‘desired’ exchange rate level without changing international reserve position, paper finds
Mexico hikes rates to stabilise peso depreciation
Bank of Mexico surprises markets with 50bp hike to stem currency depreciation; analysts see global risk factors contributing to exchange rate developments
Analysts see intervention challenge for central banks
Following the fallout of EU referendum result, central banks step in to stabilise currency movements; analysts expect volatility to continue, but see challenges to intervention
SNB paper challenges idea that capital flows drive Swiss franc value
Empirical study finds no strong relationship between capital flows and the level of the franc, meshing with earlier literature showing asset prices can move sharply without major portfolio shifts
External factors most important inflation driver, Mauritius survey shows
Inflation expectation shows 71% of stakeholders asked believe external environment is most important factor in inflation pattern; exchange rate viewed as second most important
Algeria’s longest serving governor dismissed
President dismisses Laksaci after 15 years of service at central bank; head of state-run Banque Extérieure d'Algérie Mohamed Loukal to take helm
‘Uncomfortable’ currency depreciation important for adjustment – Sarb governor
Advantages to depreciation easy to overlook, says Kganyago, noting South African manufacturing and services exports have become more competitive as a result
IMF approves larger credit line to Mexico
Fund expands flexible credit line arrangement to $88 billion; confident Mexico's policies "will remain strong"
Central bankers hail first phase of global forex code
Central banks say they will adhere to new global code and hold their counterparties to a similar standard, as BIS working group unveils first part of project
Board member appointed as next Czech governor
Rusnok has been on the board since 2014 and is a former interim prime minister; he will serve a term of “at least five years”, from July 1
More ‘flexible’ Nigerian exchange rate regime met with cautious optimism
Central bank announces intention to move to more flexible regime, though exact parameters not yet announced; analysts seem hopeful about the move but lack of details is worrying
BoE economists map current account dangers across OECD
Treating the current account as equivalent to the balance of trade could blind economists to the risks posed by large deficits, say Kristin Forbes, Ida Hjortsoe and Tsvetelina Nenova
Sarb ‘pauses’ hiking cycle on improved inflation outlook
South African monetary policy committee votes five-to-one to leave rates on hold; governor stresses central bank is not reversing policy
Bank of Zambia expects ‘sharp decline’ in inflation
Monetary policy stance having “desired” results, according the MPC, minutes from latest meeting show; bank leaves rate on hold at 15.5%