Select a page

Banking News

FX Volatility to Persist Through 2023 - Westpac

FX Volatility to Persist Through 2023 - Westpac

(15 September 2022 – Australia) Evidence for the US and elsewhere of persistent weakness in activity and an emerging downtrend in actual and expected inflation has been quickly discounted, resulting in a renewed trading focus on risk, Westpac highlights in its updated medium-term FX forecasts.

Westpac has flattened its profile for the USD into the end of 2022, expecting developed-world interest rate hiking cycles to cease. US economic weakness on an absolute and relative basis is expected to weigh heavily on the USD through 2023 and to mid-2024.


GBP has shown greater momentum than the Euro on rebounds against the USD over the past year. However, there seems a high chance that Sterling will now underperform through to end-2023. While the support to households to combat high energy prices is substantial, Britain is yet to put forward a concrete plan of action with respect to energy efficiency and supply diversification akin to the European Commission’s “RePowerEU” initiative.


“It is striking that Japan’s Yen has depreciated sharply against the US dollar despite a circa 30 percent fall in price of oil, a material positive for Japan’s trade position. As risk appetite returns and investors look for growth opportunities across the world, it seems inevitable that we will see a material retracement of recent Yen weakness” commented Westpac Senior Economist, Elliot Clarke.


“China’s Renminbi meanwhile is likely to experience sustained gains versus the US dollar. While this month the market’s focus has been on the Renminbi’s near 4 percent bilateral depreciation, the trade-weighted CFETS index has held firm” Clarke added.

Comment on this article


Your comments will not be published. Required fields are marked *


Please enter the word you see in the image below:


Subscribe to our mailing list

Sign up now to keep up-to-date with the latest
market news and insights in B2B banking.

* indicates required

For more information please read our Terms and Conditions and Privacy Statements.