Risk sentiment improved in currency markets on Thursday. As a result, most currencies rallied against the US dollar. The euro jumped 0.43% to $1.076 during this session. Sterling also soared 0.63%, changing hands at $1.215.
Also, the Swedish krona came forward today. The country’s central bank raised its interest rates and promised more increases in the coming months. The bank raised its benchmark interest rate by 50 basis points to 3%, announcing that it wanted to boost the krona. The Riksbank also added that a stronger currency would help the country curb inflation.
The dollar plunged 2% against the krona, trading at 10.39. The common currency was also down 1.5% to 11.7 kroner. It looked set for its biggest daily percentage drop since 2015. Earlier this week, the Swedish currency hit its lowest level since 2009 against the euro, trading under pressure. Investors thought the Riksbank would offer a smaller raise compared to the European Central Bank. Such sentiment sent the crown into the red.
Simon Harvey, head of currency research at Monex Europe, said that while today’s news was supportive of the krona, if the ECB continues its aggressive policy, it will ultimately be enough.
On Thursday, the dollar plunged 0.4% against the Japanese yen. It changed hands at 130.9 yen at last. The Japanese authorities intend to introduce the BOJ gubernatorial candidate to parliament on February 14. Traders are watching this news as the new governor will influence the ultra-loose policy of the central bank.
Meanwhile, the Australian dollar was up 0.77% at $0.6977. Other riskier currencies also traded in the green. Investors are waiting for the US unemployment data. The latter is due on Thursday.
How are emerging market currencies doing?
Emerging market currencies gained on Thursday, trading in the green. The South African rand rallied. Market participants await President Cyril Ramaphosa’s speech. His comments are likely to influence the price of the coin. Overall, the rand rose 0.4% to 17.69 in early trading on Thursday.
At the same time, in Central and Eastern Europe, currencies rose against the euro. The Romanian leu jumped 0.2%. Investors expect their central bank to keep its benchmark rate unchanged at its next meeting. According to some forecasts, the leu could fall 2.5% to 5.02 during the year. On the other hand, the Hungarian forint and Polish zloty are likely to rise further in the next 12 months. The Russian ruble fell against the dollar today. The currency briefly fell to its lowest level since late April.
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