If 2023 was the year of predictable global interest rate rises, 2024 could prove to be a bit more uncertain.
Many observers believe US rates have finally peaked, and a lot of banks are pricing that the Federal Reserve will make its first cut in March with five quarter-point cuts to follow. Others predict the European Central Bank will follow suit in the second quarter, as will the Bank of England.
What foreign exchange hedgers – and those at corporates, in particular – will be keeping an eye on are the various interest rate differentials between the US and other countries.
Last year, the wide gap in these differentials between G10 and emerging market (EM) countries led to a flock of investors utilising the carry trade strategy to profit…
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