Global Currencies Regain Strength Against the US Dollar Amid Rate Shifts and Trade Pressures: Emkay Wealth Management
Emkay Wealth Management Ltd, the wealth management arm of Emkay Global Financial Services in its latest press navigator report on currency cited that in the past month, major global currencies have regained some ground against the US Dollar, with central bank policies, inflation dynamics, and geopolitical trade developments shaping the moves.
The Indian Rupee weakened to Rs88 against the Dollar, pressured by ongoing tariff disputes with the US and subdued foreign investment flows. Past RBI interventions have provided temporary relief, but sustained improvement hinges on easing tariffs and a potential Fed rate cut that could revive FII inflows. Currency trends over the past year highlight sharp swings: the Yen fluctuated between 141 and 157 per Dollar, while the Euro and Pound saw notable resilience despite economic headwinds. The Yuan largely stabilized within a narrow band.
The Euro remains steady, with the European Central Bank holding its base rate at 2.00% until inflation expectations ease further. The Japanese Yen had strengthened on speculation of a potential US Fed rate cut and better-than-expected Q2 GDP growth in Japan. The actual rate cut led to marginal weakness in Yen as the indication from Fed Chairman was that of a more gradual approach (to rate cuts) going ahead. Investors expect the Bank of Japan to continue rate hikes to counter inflation and Yen weakness, amid mounting US pressure over currency imbalances.
The British Pound faced another 0.25% base rate cut, bringing it to 4%. This marks the fifth cut in a year, reflecting weak economic growth but with persistent inflation risks keeping market yields firm. In contrast, the Chinese Yuan strengthened against the Dollar, supported by the PBoC’s accommodative stance to boost economic recovery. However, weak retail sales and a sluggish real estate sector remain a drag on growth.
As global monetary policies diverge, currency markets are expected to remain volatile, with medium-term directions guided by inflation trends, central bank actions, and trade policy developments.
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