Currencies under the banner of inflation, interest rates and hedging costs – Abroad we have recently seen both inflation and interest rate levels rise, sometimes significantly. We expect a further widening of the interest rate differential compared to Switzerland and higher hedging costs for currency risks. What are the reasons behind and what are potential approaches to deal with these?
The macro perspective
The long road to monetary policy normalization – In April, the European Central Bank reduced its monthly bond purchases from 80 to 60 billion euros. Even if the ECB’s monetary policy remains extremely expansive, this was a first small step toward the normalization of its monetary policy. But a look at the US shows that the ECB still has a long way to go.
FX market talk
Emerging market currencies still have potential – Emerging market currencies are less attractive than they were a year ago but you don’t have to sell them, either. Short-term setbacks due to commodity price developments are countered by solid economic development. Hereafter a short review and outlook.