Fed Cuts Rates: Implications for Investors and Businesses in Oman as Dollar Stays Strong
توکیو: The US dollar experienced fluctuations on Thursday as traders assessed the Federal Reserve’s cautious stance on potential interest rate cuts. Market attention also shifted to the Bank of England, which is not expected to alter its current rate.
The British pound dipped 0.1% to $1.3615 after briefly reaching $1.3726 on Wednesday, its highest level since early July. The euro remained steady at $1.1823 after retreating from a peak of $1.19185—the highest since June 2021.
In a widely anticipated move, the Fed lowered interest rates by a quarter point on Wednesday. Chair Jerome Powell characterized the decision as a "risk-management" strategy in response to a softening labor market, while signaling that there was no immediate need for further cuts. Analysts reacted variably; Goldman Sachs indicated that additional cuts may follow, while ANZ questioned the dovishness of Powell’s comments.
The dollar index fell to 96.224—its lowest since February 2022—immediately after the Fed’s announcement, but then rebounded to settle around 97.06.
Elliot Clarke from Westpac remarked that the Fed’s revised forecasts illustrate ongoing uncertainty and inflation risks, even as the possibility of future rate reductions was acknowledged.
The Bank of England is anticipated to maintain rates at 4%, with market focus shifting towards its quantitative tightening strategy. Francesco Pesole from ING cautioned that any unexpected changes to quantitative tightening could lead to sell-offs in gilts and negatively impact the pound. Data released on Wednesday indicated UK inflation at 3.8% in August, reinforcing the belief that rate cuts are unlikely in the near term.
While markets are pricing in one or two additional rate cuts by the end of the year, persistent inflation and rising political risks are moderating these expectations.
In Norway, the central bank has cut rates for a second time in three months, signaling the potential for further easing. Consequently, the euro rose by 0.1% against the Norwegian krone, reaching 0.86775.
The US dollar strengthened slightly to 147.215 yen ahead of Friday’s anticipated Bank of Japan announcement, where rates are expected to remain unchanged, though markets are anticipating a potential quarter-point increase by March.
In New Zealand, GDP data revealed a 0.9% contraction in the second quarter, which was worse than expected. This puts increased pressure on the Reserve Bank of New Zealand to consider easing, driving the New Zealand dollar down nearly 1% to $0.5895, its lowest point since September 8. — Reuters
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The recent fluctuations in the دلار آمریکا, underlined by the Federal Reserve’s cautious approach to interest rates, signal potential opportunities for Oman. As international markets react, savvy businesses should consider leveraging currency strategies to mitigate risks associated with exchange rate volatility. Investors and entrepreneurs may find it prudent to explore sectors that could benefit from evolving monetary policies, particularly those linked to export and import dynamics.
