Interbank, Federal Reserve. The Board of Governors of the Federal Reserve reiterated that its primary policy tool for managing the money supply, maintaining stable prices, and pursuing maximum employment is the federal funds rate, the interbank, overnight rate banks apply when lending reserves to each other. The Board will reduce its balance sheet of assets after its initial raising of the federal funds rate which markets expect to occur in March 2022. Legal advisors should keep this in mind when reviewing or counseling clients on foreign exchange contracts. To see the Board’s release, follow this link.
Interbank, US Dollar. Analysts are expecting further slippage in the euro versus the dollar given the Board of Governors of the Federal Reserve’s decision last Wednesday on interbank overnight lending rates (the federal funds rate). Analysts are seeing the EUR/USD falling to support levels as low as 1.10. Legal advisors should keep this in mind when advising clients on foreign exchange contracts. To see this article, follow this link.
Interbank, SONIA. As banks transition from LIBOR to alternative interest rate benchmarks, here is a discussion on implications from and an update on the status on making the change from LIBOR.
Interbank, European Central Bank. The ECB issues a statement on historically low number of counterfeit banknotes. Approximately 347,000 banknotes were withdrawn from circulation. To see this article, follow this link.
Foreign exchange rates of interest to Atlanta’s immigrant community
The Vietnamese dong, Mexican peso, Indian rupee, and Nigerian naira ended relatively flat this week. These currencies are the home currencies of the Atlanta area’s largest immigrant groups. The dong closed .0007%. The naira was down .0003%. The rupee and peso were down .0019% and .0018%, respectively.
The Federal Reserve may have seen today’s jobs situation report as incentive to stay on course with its expected fed funds rate increases later this spring or summer. The unemployment rate fell to 3.9% with non-farm payrolls increasing by 199,000 workers. Historically, numbers like these are an indication of full employment and could be a threshold to wage inflation and a sign of increased economic activity. Increased economic activity may see the dollar become more expensive along with an increase in demand for dollar denominated assets.
The Federal Reserve was quiet today with no statements made by any members of the Board of Governors; likely the silent hangover from the holidays.
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Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.
The dollar’s strength continues to vary since our post yesterday. The dollar weakened against the Australian dollar, the Canadian dollar, and the Chinese yuan. The dollar also weakened against the British pound and the Mexican peso. It continues to trade flat against the Japanese yen.