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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FOREX
- The deterioration in the Russia/Ukraine conflict has left CEE currencies vulnerable in recent weeks, depreciating significantly against the major crosses.
- On the other hand, the surge in risk aversion has increased demand for the 'safe' US Dollar, which is currently trading at the highest level since June 2020 (DXY).
- The chart below ranks the major G10 and CEE currencies based on their percentage difference between the current spot rate and their 'fair' value, which we define using a Behavioral Equilibrium Exchange Rate (BEER) model (using terms of trade, inflation and 10y interest rate differentials as explanatory variables).
- The HUF remains currently the most ‘undervalued’ currency against the USD (nearly -23.2%).
- SEK is the most 'undervalued' currency among the G10 world according to our BEER model (-20.5%).
- 'Risk-on' currencies GBP and AUD also remain 'cheap', currently trading at approximately 15% below their 'fair' value.
- Both currencies have historically been very sensitive to the dynamics of global markets and generally tend to depreciate when price volatility surges.
- On the other hand, the CHF remains the most ‘overvalued’ currency against the USD (by 8.4%).
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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