Most currencies of the world are weakening against USD. The reason is: many experts think that the FRS will not change the discount rate, but will signal that it will be able to take this step in the future. In other word, the USD will not rise today, however, will be strengthened in the future. This statement will be sufficient for increase of USD. ON the background of USD rise, most currencies, including oil are doomed to decline. It’s almost exact that FRS will increase the discount rate. The main question is when the FRS will take this step. With high probability, the FRS will do than in the April meeting, but not the June meeting. In this case the USD will increase more quickly.
Some western experts think that the FRS policy does not coincide with the policies of some leading central banks of the world. For example European Central Bank, as well as Swedish, Danish, Swiss, Japanese central banks apply negative interest rate. Moreover, the regulators have expanded program of assets acquisition.
It’s difficult to say whether the US Central Bank is swimming against the current or not. However, the FRS policy forced several regulators, including Central Bank of Azerbaijan to swim against the current. As you know, the manat has been finding its rate by floating since December 21, 2015. One of the interesting point is that manat has started to increase against the USD prior to the FRS meeting and once more demonstrated that it is swimming against the current.
An interesting fact on FRS meetings: though the 60% of market participants don’t believe that the USD will go up, the regulator does not increase the discount rate. Certainly, the FRS is preparing the market for its meetings.
The USD has been increasing about two years. Who needs cheap or expensive USD? This question will be responded by the FRS chairwoman today.
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