Archive for March, 2015

The Global Economy in March

The US took prominence in global events in March as positive economic developments took the dollar to a 11-year high against a basket of six major competitor currencies. However, the tides turned for the greenback in the latter part of the month after the Federal Reserve, in its latest FOMC meeting, indicated a much slower pace of rate hikes. The Federal Reserve also removed its pledge to be patient in raising interest rates making clear that the lift-off will take place soon, however stressed that it’s unlikely to occur in April. The Euro, on the other hand, continued its downward spiral as the European Central Bank launched its massive quantitative easing program. Reaching a 12-year low, the Euro almost came in parity with the US dollar. In Asia, the Indonesian rupiah fell to a 17-year low against the dollar during the month after China, Indonesia’s largest trading partner, lowered its growth forecast for the year. Central Banks took a more accommodative stance amid easing inflation outlook; China, India, Pakistan and Thailand cut key policy rates during the month. On the commodities side, Brent oil failed to advance on its 18% rally in February; a strong dollar and International Energy Agency’s observations that rising US crude inventories could lead to further weakening of prices weighed on crude markets throughout first few weeks of the month. However, prices saw a rebound in the latter part of the month amid Yemen conflicts and a weakening dollar.