FXStreet (Edinburgh) – The research team at BBH reviewed this week’s activity by EM central banks.
Key Quotes
“The SARB hiked rates 25 bp to 6%, as many expected. This was the first move in a year, with the last 25 bp coming on July 17 2014. We think the move was a bit precocious, especially with commodity prices heading lower again. Either way, we doubt the move will do much for the rand, which should continue weakening. As it is, the rand ended weaker on the day despite the hike. Any firmness should be viewed as an opportunity to sell it at better levels”.
“The Czech central bank intervened in the FX market for the first time since 2013. Optimism on the economy has seen EUR/CZK slip close to the floor “around” 27. The Czech National Bank confirmed the activity, but declined to comment on the volumes and levels. The central bank is ready to “automatically intervene for an unlimited time and in unlimited volumes to keep the koruna rate close to the level of 27 per euro. The CNB only acts against exchange-rate appreciation beyond the declared level.” The bank has pledged to maintain the floor until “at least” H2 2016”.
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