FX UPDATE 15/10/2024

The Dollar maintained its gains and even increased slightly during Asian trading on Monday, as a holiday in Japan reduced market activity. The greenback also gained 0.13% against the Japanese Yen, reaching 149.2750. Whereas the Dollar index, measuring the currency against six major rivals, hovered just above 103, nearing last week's peak, its highest level since mid-August, driven by traders scaling back expectations of major rate cuts from the Federal Reserve in its remaining meetings this year, Reuters reports.

In China, the Yuan fell by 0.2% against the Dollar, while the Australian Dollar, closely linked to China's economy, dropped 0.16% to $0.67385. On Saturday, China announced plans to “significantly increase” government debt issuance, aiming to provide subsidies for low-income individuals, support the property market, and strengthen state banks' capital in an effort to boost sluggish economic growth. Although Finance Minister Lan Foan did not specify the size of the upcoming fiscal stimulus, he mentioned at a press conference that more “counter-cyclical measures” will be introduced this year. “Markets are likely disappointed that China's Finance Ministry did not unveil concrete additional stimulus,” according to Richard Franulovich, head of FX strategy at Westpac. “The weekend press briefing mostly just reinforces our existing expectations that China's policy pivot is worth a one-time 3-4 cents lift in the Australian Dollar's equilibrium, of which about half has already been priced in.” The onshore Yuan has declined by 0.7% against the Dollar since 24th September, when the People's Bank of China launched its most aggressive stimulus efforts since the pandemic.

The Indian Rupee fell to an all-time low on Monday, pressured by sustained Dollar demand from foreign banks, likely acting on behalf of their custodial clients. The Rupee slipped to a record low of 84.0725 against the greenback, slightly surpassing the previous low of 84.07 reached on Friday. The currency had hovered near the 84 mark for over two months, propped up by consistent interventions from the Reserve Bank of India. The Rupee has faced continued pressure this month, largely due to persistent outflows from local equities. Foreign investors have withdrawn approximately $8 billion over the past 10 trading sessions, contributing to the currency's decline.

Elsewhere, the Euro dipped 0.13% to $1.0922, while the Pound stayed relatively stable but momentarily fell by 0.2%.

In addition, the New Zealand Dollar fell 0.15% to $0.61, continuing its decline after last week's 0.8% drop, which followed the central bank's decision to cut rates by half a point and signal the possibility of further reductions.