EDUSELL
Financial Market Examiner
Midas Crypto Vault
  • Home
  • Education
  • Forex News
  • Crypto News
  • Stocks
  • Reviews
No Result
View All Result
  • Home
  • Education
  • Forex News
  • Crypto News
  • Stocks
  • Reviews
No Result
View All Result
Financial Market Examiner
No Result
View All Result
Home Forex News

PIDS Warns Of Severe Forex Fluctuations

Admin by Admin
December 5, 2022
in Forex News
0
Kenya's Forex Reserves Plummet To New Low
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter
Webinar Webinar

The country should prioritize avoiding severe exchange rate fluctuations as economic activity is expected to weaken next year given global headwinds.

Citing previous papers, authors PIDS senior research fellow Margarita Debuque-Gonzales, supervising research specialist John Paul Corpus and research analyst Ramona Maria Miral said sharp peso depreciation makes the fight against inflation even more difficult.

The peso returned to the P55:$1 level on Friday, strengthening for a seventh straight day to its best showing in more than three months.

They said it may also have negative effects on balance sheets, particularly for firms that have taken on a large amount of unhedged dollar-denominated debt, contributing to financial tightening.

More generally, high exchange rate volatility heightens business uncertainty, with the increase in transaction costs having a well-known negative effect on the growth of small open economies in the longer run, with trade and investment as the main channels.

As severe exchange rate fluctuations are avoided, the authors said the appropriate response must depend on the nature of the exchange rate shock, as well as its impact on the monetary and financial sectors.

“If the depreciation is due to fundamental factors (e.g., an appreciating US dollar and rapidly rising US interest rates, and current account deficits due to relative price shocks) and financial markets are not in turmoil, the correct strategy would be to simply adjust monetary policy to keep within inflation targets and allow the exchange rate to serve its role as an automatic shock absorber,” they said.

Debuque-Gonzales, Corpus, and Miral said letting the exchange rate depreciate, for instance, naturally reduces imports and encourages exports, helping bring down trade deficits and prevent the accumulation of external debt.

The authors said temporary intervention is deemed appropriate when there are acute disturbances in the foreign exchange market that in turn destabilize other financial markets and trigger macroeconomic instability, or worse, lead to large corporate defaults that could fuel and amplify a financial crisis.

Apart from smoothening exchange rate volatility but maintaining flexibility, they also identified other policy priorities and proposals that have benefits cutting across different horizons.

These are controlling inflation without harming growth, pursuing fiscal sustainability but protecting those at risk, preparing for financial tightening and uncertainty, addressing the pandemic scars, and continuing the policy momentum on investments.

The economic outlook features significant challenges and downside risks, including persistently high inflation, an uncertain business environment, and a possible downturn in the world’s major economies.

Financial tightening in advanced economies can be expected to spill over to EMDEs (emerging markets and developing economies)

Share on TwitterTweet
Share on Pinterest Share
Share on LinkedIn Share
Share on Digg Share
Tags: Forexforex fluctuationPIDS
Institutional Trading Concept Institutional Trading Concept Institutional Trading Concept
ADVERTISEMENT
Previous Post

Best Passive Income Strategies in Crypto

Next Post

Coinbase CEO Rejects FTX Accounting Error Says Funds Were Stolen

Admin

Admin

Next Post
Coinbase CEO Brian Armstrong, CLO Grewal Sold COIN Stocks Ahead Of US SEC Action

Coinbase CEO Rejects FTX Accounting Error Says Funds Were Stolen

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Stay Connected

  • 99 Subscribers
  • Trending
  • Comments
  • Latest
yen and dollar

FOREX-Yen Flirts With Intervention Level As Dollar See Gains

October 11, 2022
AUD USD pair

Forex: AUD/USD Point To More Downside For The Aussie

October 20, 2022
Mayowa Owolabi on battles traders need to fight

Battle Every Trader Must Fight (Part 1)- Mayowa Owolabi

August 31, 2022
Meta (Ex-Facebook) Fined €1.2 Billion In Landmark EU Ruling

Meta Verified Shows A Company Running Out of Ideas

February 22, 2023
XAGUSD pair

XAG/USD Climbs to Mid-$19.00s

4
Premier League Considering Partnership With NFT Crypto Platform

Premier League considering partnership with NFT crypto platform

2
EUR/USD pair

EUR/USD Recovers from 20-year Lows

2
Binance CEO Supports Terra Classic Raising LUNC Burn Tax To 0.5%

Binance Proof-Of-Reserve Pledge Earns Support Following FTX Crisis

2
EUR/USD pair

EUR/USD Climbs to Fresh Daily Highs Near 1.0750

June 1, 2023
Binance Initiates Layoffs Amid Market Uncertainty

Binance Initiates Layoffs Amid Market Uncertainty

June 1, 2023
Binance To Disable Privacy Coins DASH, XMR, ZEC In France

Binance To Disable Privacy Coins DASH, XMR, ZEC In France

June 1, 2023
Former SEC Exec Predicts Crackdown On Crypto Influencers

Former SEC Exec Predicts Crackdown On Crypto Influencers

June 1, 2023

Recent News

EUR/USD pair

EUR/USD Climbs to Fresh Daily Highs Near 1.0750

June 1, 2023
Binance Initiates Layoffs Amid Market Uncertainty

Binance Initiates Layoffs Amid Market Uncertainty

June 1, 2023
Binance To Disable Privacy Coins DASH, XMR, ZEC In France

Binance To Disable Privacy Coins DASH, XMR, ZEC In France

June 1, 2023
Former SEC Exec Predicts Crackdown On Crypto Influencers

Former SEC Exec Predicts Crackdown On Crypto Influencers

June 1, 2023
Financial Market Examiner

Get all the latest Financial Market (Crypto & Forex) news, updates and other relevant resources here.

Follow Us

Browse by Category

  • Crypto News
  • Education
  • Entertainment
  • Forex News
  • Gaming
  • Review
  • Reviews
  • Stocks
  • Uncategorized

Recent News

EUR/USD pair

EUR/USD Climbs to Fresh Daily Highs Near 1.0750

June 1, 2023
Binance Initiates Layoffs Amid Market Uncertainty

Binance Initiates Layoffs Amid Market Uncertainty

June 1, 2023

© 2022 Financial Market Examiner. - Designed by Mayconcept Solutions.

No Result
View All Result
  • Home
  • Education
  • Forex News
  • Crypto News
  • Stocks
  • Reviews

© 2022 Financial Market Examiner. - Designed by Mayconcept Solutions.

?>