Monetary Policy Committee
Financial Markets Developments
J. Pandoo
Head – Financial Markets Operations Division
14 July 2014
Volatility Indices
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2-Year Yields in Selected European
Countries
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10-Year Yields in Selected Countries
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Exchange Rate
Developments
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Movements of EUR & GBP against USD
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Exchange Rate Movements
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Exchange Rate of Selected Currencies
vis-à-vis the US Dollar
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Exchange Rate of Selected Currencies
vis-à-vis the Euro
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Bloomberg Spot Forecast:
EURUSD & GBPUSD
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Exchange Rate Outlook
International
• Relatively weak fundamentals, deflationary risk (or persistently low inflation)
in the Eurozone, unattractive interest rate differentials and the ECB’s deeper
monetary stimulus will weigh on the Euro and support the US dollar.
• Strong economic numbers and higher inflation prints in the US are enough to
keep the Fed on its tapering path and move towards higher interest rates in
2015. This further support the greenback. However, the US trade deficit
deteriorated sharply, rising to its highest level in two years.
• The domestic environment is encouraging in the UK and the BoE is expected
to be the first of the G4 to hike interest rates; this has supported the GBP.
However, the BoE has forecasted in May that economic growth could start to
slow in the second half this year which could potentially reduce the chance of
an interest rate hike this year, causing the GBP to become vulnerable.
Domestic
• The evolution of the rupee exchange rate is expected to be conditioned by
developments in major currency markets as well as by domestic demand and
supply factors.
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Money Market
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Banks Excess Reserves
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Issuance of BOM Instruments &
Banks’ Excess Reserves (Rs bn)
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Projection of Banks’ Excess Reserves (Rs bn)
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BoM Securities: Issuance and Maturing
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Maturity Profile of Bank of Mauritius
Securities (Rs mn)
3,000.0
2,500.0
2,000.0
1,500.0
BoM Bills
BoM Notes
BoM Bonds
1,000.0
500.0
-
Mar-29
Feb-18
Apr-17
Jan-17
May-16
Jan-16
Rs mn
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
2,693.00
BoM Bills
BoM Notes
7,684.50
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13,442.50
BoM Bonds
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Weighted Yield on T-Bills & T-Notes
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Yields on Long-Term GoM Bonds
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3-Month Interest Rate Differentials
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6-Month Interest Rate Differentials
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12-Month Interest Rate Differentials
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BoM Intervention on
Domestic Forex Market
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BoM External Assets
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Recent Policy Rate Cuts
DATE
10-Jul-14
03-Jul-14
24-Jun-14
24-Jun-14
12-Jun-14
06-Jun-14
05-Jun-14
04-Jun-14
30-May-14
27-May-14
22-May-14
13-May-14
08-May-14
30-Apr-14
29-Apr-14
COUNTRY
Mauritius**
Peru
Sweden
Turkey
Hungary
Serbia
Mexico
Eurozone*
Uganda
Albania
Hungary
Turkey
Armenia
Serbia
Azerbaijan
Hungary
** Year-on-Year inflation rate.
Rate
Cut
(bps)
25
50
75
10
50
50
10
50
25
10
50
25
50
50
10
Policy Inflation Ref.
Real
Rate
Rate Period Policy Int
(%)
4.65%
3.3
Jun-14 1.35%
3.75%
3.45
Jun-14 0.30%
0.25%
0.20
Jun-14 0.05%
8.75%
9.16
Jun-14 -0.41%
2.30% -0.10 May-14 2.40%
8.50%
2.10 May-14 6.40%
3.00%
3.75
Jun-14 -0.75%
0.15%
0.50 May-14 -0.35%
11.00% 5.40
Jun-14 5.60%
2.50%
1.5
Jun-14 1.00%
2.40% -0.10 May-14 2.50%
9.50%
9.16
Jun-14 0.34%
7.25%
1.80
Jun-14 5.45%
9.00%
2.10 May-14 6.90%
4.25%
1.90 May-14 2.35%
2.50% -0.10 May-14 2.60%
# Except Mauritius.
IMF ESTIMATES for 2014 (Apr-14 WEO) #
GDP Unemploy- GNS Budget General Govt CAB
Growth ment Rate
Balance Gross Debt
(%)
(% of GDP)
3.5
8.0
13.0 -3.2
52.4
-9.1
6.1
6.8
23.5
1.6
16.7
-3.4
2.2
7.8
25.5 -0.5
36.5
6.8
3.7
9.5
14.6 -2.3
35.4
-7.3
1.2
10.9
19.6 -3.4
80.3
1.8
2.7
0.6
41.9 -0.7
32.2
-5.5
3.4
4.5
23.7 -3.0
43.9
-1.0
0.9
11.6
-2.1
1.8
6.2
0.0
7.3
-4.8
72.5
-14.8
2.5
10.5
13.1 -3.3
62.4
-9.0
1.2
10.9
19.6 -3.4
80.3
1.8
3.7
9.5
14.6 -2.3
35.4
-7.3
4.1
18.0
22.3 -2.4
45.2
-8.2
2.0
22.9
11.3 -4.7
66.5
-8.6
5.8
6.0
30.0 -4.4
13.4
6.0
1.2
10.9
19.6 -3.4
80.3
1.8
*Latest data from ECB's website
Source: http://www.tradingeconomics.com; http://www.cbrates.com; The Economist.
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Recent Policy Rate Hikes
DATE
10-Jul-14
09-Jul-14
20-Jun-14
18-Jun-14
12-Jun-14
30-May-14
COUNTRY
Mauritius**
Malaysia
Ghana
Colombia
Namibia
New Zealand
Colombia
Rate
Hike
(bps)
Policy Inflation Ref.
Rate Rate Period
(%)
4.65% 3.3 Jun-14
25 3.25% 3.20 May-14
100 19.00% 14.80 Jun-14
25 4.00% 2.79 Jun-14
25 5.75% 6.10 May-14
25 3.25% 1.50 Q12014
25 3.75% 2.79 May-14
Real
Policy Int
Rate
1.35%
0.05%
4.20%
1.21%
-0.35%
1.75%
0.96%
IMF ESTIMATES for 2014 (Apr-14 WEO) #
GDP Unemploy- GNS Budget General Govt CAB
Growth ment Rate
Balance Gross Debt
(%)
(% of GDP)
3.5
8.0
13.0 -3.2
52.4
-9.1
5.2
3.0
32.3 -3.7
55.7
5.7
6.8
11.8 -8.7
56.1
-10.1
4.5
10.0 19.7 -0.9
31.2
-2.9
4.0
17.3 -1.7
29.1
-3.3
2.6
6.0
14.8 -0.5
37.9
-6.0
4.5
10.0 19.7 -0.9
31.2
-2.9
** Year-on-Year inflation rate.
# Except Mauritius.
Source: http://www.tradingeconomics.com; http://www.cbrates.com; The Economist.
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Forecast of Policy Interest Rates
REUTERS (03-Jul-14)
Current
Inflation
Official Rate
Rate
Sep-14 Dec-14 Mar-15 Jun-15
03-Jul-14
Global
2.33
Developed
0.29
Emerging
6.02
US
0.125
2.1
0.125
0.125
0.125
0.125
Euro area
0.15
0.5
0.15
0.15
0.15
0.15
UK
0.50
1.5
0.50
0.50
0.75
1.00
Japan
0.05
3.7
Canada
1.00
2.3
1.00
1.00
1.00
1.00
Australia
2.50
2.9
New Zealand
3.25
1.5
Brazil
11.00
6.4
Russia
7.50
7.8
India
8.00
8.3
China
6.00
2.5
6.00
6.00
6.00
6.00
Indonesia
7.50
6.7
Malaysia
3.00
3.2
Thailand
2.00
2.4
Philippines
3.50
4.4
South Korea
2.50
1.7
Turkey
8.75
9.2
South Africa
5.50
6.6
© Bank of Mauritius
(per cent)
JP MORGAN (03-Jul-14)
Sep-14
Dec-14
Mar-15
Jun-15
2.30
0.30
6.07
0.125
0.15
0.50
0.05
1.00
2.50
3.50
11.00
7.50
8.00
6.00
7.50
3.25
2.00
3.50
2.50
8.00
5.75
2.30
0.30
6.07
0.125
0.15
0.50
0.05
1.00
2.50
3.75
11.00
7.25
8.25
6.00
7.50
3.25
2.00
3.75
2.50
8.00
5.75
2.33
0.32
6.13
0.125
0.15
0.75
0.05
1.00
2.50
4.00
11.75
6.75
8.25
6.00
7.50
3.50
2.25
4.00
2.50
8.00
6.25
2.35
0.35
6.15
0.125
0.15
1.00
0.05
1.25
2.50
4.25
12.00
6.50
8.25
6.00
7.50
3.50
2.50
4.00
2.75
8.00
6.50
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Policy Interest Rates (%) –
GDP Weighted (JP Morgan)
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Stock Market
Developments
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MSCI World, Emerging &
Frontier Market Indices
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Developed Market Indices & SEMDEX
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Emerging Market Indices & SEMDEX
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Foreign Investment on Local Stock Market
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Stock Market Outlook
International
• Global stocks markets are holding near record highs on signs of an
improving global economy and continued central bank support.
• Global equities are expected to extend their rally into the second half
of the year mostly on the continued recovery and the ECB’s recent
stimulus measures amid the low interest rates environment.
• However, global tensions and reduced stimulus from the Federal
Reserve might keep stock market gains modest; further signs of an
economic slowdown in China and future interest rate hikes in major
economies could lead to risk aversion and affect equity markets.
Domestic
• The local stock market is expected to remain supported in tandem
with global equities although profit-taking and any potential retreat by
foreign investors may somewhat limit its gains.
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