Small Exchange: Asia restoring forex reserves, Pound to go cheaper and geopolitics in Poland

Peter Terlato 13 June 2017 NEWS


This week's currency news rounded up.

Asian central banks strengthening foreign exchange reserves

In the lead up to the forthcoming US Federal Reserve decision on interest rates, Asia's central banks are reportedly stockpiling and rebuilding foreign exchange reserves as the first line of defence against the third rate hike in just six months.

Bloomberg reports extended periods of tightening can be distressing for emerging markets in Asia.

The People's Bank of China has again begun purchasing US Treasuries, stacking forex reserves and growing its purses by US$24 billion in May to total over US$3 trillion.

Southeast Asian nations Indonesia, Malaysia and Singapore have also seen substantial gains in foreign reserves in recent months. Despite slipping lower last month, India's reserves are at all-time high levels.

Pound and Dollar to deteriorate in value

As part of their mid-year review of global foreign exchange markets, forex strategists at universal bank Société Générale tipped the Pound to sink lower against the Euro, while the US Dollar has hit its peak.

The French multi-national investment bank said "Brexit negotiations will add to policy uncertainty” for the Pound, while forecasting the Euro to bounce back and the US dollar to fade after years of steady rises.

Geopolitics a big issue for Poland's currency

The latest Bloomberg FX survey reveals more than half (56%) of foreign exchange executives in the Polish capital of Warsaw believe the biggest challenge facing local corporations are geopolitical issues.

Political challenges between Europe and Poland are expected to greatly affect Poland's currency, the zloty, in 2017. The other half of respondents said moves by European central banks and the Federal Reserve would be the biggest threat.

Each week Small Exchange sums up currency news from around the globe and looks into how it impacts exchange rates and options.

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