Fed vs. PBoC – Rabobank

By FXStreet FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, suggests that the decisions by the monetary authorities in Hong Kong and Mexico to follow this week’s Fed tightening with interest rate hikes of their own has not raised too many eyebrows.

Key Quotes

“The Hong Kong monetary authorities maintains a USD peg, at least for the time being, while the Mexican central bank has already drawn down its reserves this year in an effort to protect the peso vs. the USD. In contrast, the decision by the Taiwan central bank overnight to adjust policy was not fully anticipated. Nor was the announcement by the BoJ to make technical changes to its QQE programme. In contrast to the policy direction of the Fed, the BoT eased monetary conditions further overnight. The BoJ announced measures aimed at promoting the transition of policy stimulus.”

“Geographical location ensures that the Mexican economy is overwhelmingly focused on the US. For economies such as Japan and Taiwan, however, China is a more important trading partner. While slowing growth in China is not a new headwind, it is possible that China’s trading partners have been rattled by the PBoC’s statement last week which focused attention on China’s effective exchange …read more

Source:: FX Street