International Financial Outlook

There are few substantial changes to our exchange and interest rate forecasts this month. Of the advanced economies, the US, despite its challenges, is recovering quicker and stronger than any of its peers.

There are few substantial changes to our exchange and interest rate forecasts this month. Of the advanced economies, the US, despite its challenges, is recovering quicker and stronger than any of its peers. This has reduced the borrowing of dollars to be reinvested in other global assets, resulting in a stronger US dollar. This trend of dollar appreciation, however, is unlikely to occur in a straight line and we expect it to remain volatile. In the meantime, interest rates will likely stay on hold in the major economies until into the second half of 2010. With interest rates likely to be higher in some of the larger emerging markets, we expect the emerging currencies to gain some traction even against a rising dollar.

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