FX UPDATE 28/10/2024

?The Dollar continued to strengthen on Monday, poised for its largest monthly increase in two and a half years, fuelled by signs of a robust US economy. Speculation around Donald Trump potentially winning the presidency has pushed US yields higher?as investors anticipate policies that could postpone interest rate cuts. The Dollar index, measuring the greenback against six major rivals, rose 3.6% to 104.46 this month, the steepest monthly gain since April 2022.

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Elsewhere, the Euro was steady at $1.0790 on Monday, although it has fallen over 3% this month, whilst Sterling was trading at $1.2952, reflecting a 3.1% decline so far in October.

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The Japanese Yen fell to a three-month low on Monday as investors anticipated that the ruling coalition's loss of a parliamentary majority in Japan’s weekend elections could delay interest rate hikes. During the Asian trading session, the Yen slid to 153.88 against the Dollar and 166.06 against the Euro, marking its weakest point since late July on both fronts. By then, the Yen had fallen about 0.7% against the Dollar, with a 6.4% decline throughout October, the steepest drop among G10 currencies. During the Asian session, the Yen declined to 153.88 per Dollar and 166.06 per Euro, which was the weakest level against both currencies since late July. Most recently, the Yen was down approximately 0.7% against the greenback, with a 6.4% decline over October, the largest drop among G10 currencies.

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In India, the Rupee remained relatively stable on Monday, influenced by the strong Dollar and a central bank aiming to prevent any significant decline in the currency.? Exporters were on the lookout for more favourable levels to hedge their future foreign currency earnings. At the time of writing,?the Rupee was trading at 84.0775 against the US Dollar, showing little change from the previous session's rate of 84.08.

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Furthermore, South Africa's Rand showed minimal movement in early Monday trading?as investors focused on Wednesday’s upcoming mid-term budget. At the time of writing, the Rand was trading at 17.67 against the Dollar, close to its previous close of 17.6725. The finance minister will deliver the medium-term budget policy statement in parliament on Wednesday, providing a mid-year update on public finances. This will be the first “mini budget” under the coalition government formed in June. According to a Reuters poll of economists published last week, the finance minister is expected to announce a reduced budget deficit estimate for 2024/25 compared to February's main budget. However, ongoing fiscal challenges are likely to slow down consolidation efforts in the coming year. “Although this is not a policy-setting event, any indication of credible fiscal reforms would support market confidence and the Rand,” said Andre Cilliers, currency strategist at TreasuryONE.

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Elsewhere, the Australian and New Zealand Dollars remained under pressure on Monday, dipping to two-and-a-half-month lows. Selling pressure pushed the Kiwi?down to $0.5958, resulting in a 6% loss for October to date. Meanwhile, the Australian Dollar edged lower to $0.6579, marking a 4.6% decline for the month so far.

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