THE Turkish Lira has been coming under some additional pressure of late as a result of investor concern over the wider region, but the unwinding of dollar-lira has been ongoing for several months now. The central bank has been cutting interest rates as it tackles a growing trade deficit but inflationary pressures also need to be reined in. Consensus seems to be that a hawkish mood will once again prevail so the pace of the sell-off may soon abate. The current IG Index price on dollar-lira is TL1.5935-TL1.5955
Today's Bank of England inflation report is likely to see further sterling volatility after yesterday's 4 per cent CPI figures. Particular attention will be paid to whether Mervyn King downgrades the UK growth forecasts in the face of the prospect of higher inflation. CMC Markets spread on sterling-dollar is $1.61253 to $1.61278
Euro-dollar has been suffering from some weakness since hitting a high of around $1.3860 at the beginning for February, but a recent bounce back above $1.3500 might have given the euro renewed impetus to head back upwards. Capital Spreads quotes $1.3524 to $1.3525 for euro-dollar.
Event risk was evident for Swedish krona traders as the Riksbank resumed its series of rate increases yesterday. The central bank raised interest rates by 25bp as expected. In addition to the announcement, the Riksbank published an updated Monetary Policy Report.
The report hints that policy expectations have changed (so market participants should expect more hikes over the next 12-18 months). Krona strength against the dollar was pronounced following the decision. Given the strong fundamentals in Sweden and more broadly in Scandinavia, the interest rate in Sweden is likely to rise to 2.5-3.0 per cent before the end of 2011 and up to 4.75 per cent in 2012. Alpari UK are currently offering dollar-krona at 6.4445kr-6.4520kr.