Prince said Finance News: In 2022, the US dollar can be said to be "superior in one line", and non-US currencies are even more "falling".
Specific data, since this year, the index of the US dollar, which measures the US dollar against a basket of 16 currencies, has risen by 17.48% by cumulatively, rather than US currencies, and even include: the euro, the yen, the pound, the renminbi, etc., have depreciated to varying degrees.
As the strong dollar storm swept the world, many currencies fell sharply and depreciated, emerging market currencies were especially the first to be hit. However, in emerging markets, two countries "go against the trend". Not only did the currency not depreciate, they even appreciated against the US dollar.
These two countries are Brazil and Mexico .
Specific data, since the beginning of this year, Brazilian real has risen by more than 7% against the US dollar, while Mexican peso has also risen by 2.5% against the US dollar.
So the question is: Why did these two currencies not only not depreciate but appreciate in the context of a strong US dollar?
Wang Ye said that finance believes that the fundamental reason is mainly due to the central banks of these two countries' "action" in advance of Fed , that is, to start the interest rate hike cycle in advance, thereby slowing down the impact of interest rate spread .
In this regard, economists pointed out that long before the Federal Reserve tightened its currency, central banks of Brazil and Mexico took action to fight rampant inflation.
Specifically, as early as March last year, the Brazilian Central Bank of Brazil launched the rate hike cycle, and the benchmark interest rate even increased from a historical low of 2%, and reached a five-year high of 13.75% in August this year.
Then, including Mexico, Peru , Chile , Colombia and other Latin American countries, followed up on interest rate hikes.
Regarding this, Arturo Porzecanski, a researcher at the US think tank -Wilson Center, pointed out directly that thanks to the "preemptive" interest rate hikes in Brazil and Mexico, the central banks of Brazil and Mexico, the performance of currency will be relatively strong.
In fact, Wang Ye said that Finance has introduced many times before that Latin American currency trends have been depreciating for a long time. However, Brazil and Mexico benefited from the floating exchange rate system, and the central bank maintained independence and timely adjustments to monetary policies for inflation will ultimately help these two countries to resist the impact of domestic and foreign financials.
In response to this, economists warned that compared with Latin American central banks responding quickly like a "shocked bird", developed countries that have been in a low interest rate environment for many years seem to be "comfortable" in the face of soaring inflation.
For example: the UK's inflation rate broke 10%, hitting a 40-year high, but the benchmark interest rate only rose to 2.25%; on the other hand, Mexico's inflation rate was 8.8%, and the benchmark interest rate has soared to 9.25%; Japan even announced that it would continue to maintain monetary easing policy, and the interest rate spread with the United States continued to expand, which eventually led to a plummeting yen.
As for the future, Standard Chartered Bank predicts that the strong trend of the US dollar will continue in the short term, but in the next 6-12 months, the US dollar trend may have a chance of reversal after hitting the top. [For details, see our previous article " Standard Chartered Bank's latest forecast: In the next 6-12 months, the US dollar trend will reach its peak and then reverse? 》】
What do you think about this? What do you think will happen next? What happens to other currencies?
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