Goldman Sachs: ECB is unlikely to step directly into FX markets, there is potential for Japan – Bloomberg
22.07.2022, 00:50

Goldman Sachs: ECB is unlikely to step directly into FX markets, there is potential for Japan – Bloomberg

“The European Central Bank is unlikely to step directly into foreign-exchange markets even in the face of a more than 10% slump in the euro this year, although there is potential for Japan to engage in that kind of intervention if the yen continues to unravel, according to Goldman Sachs Group Inc,” as per Bloomberg. The piece quotes latest comments from Goldman’s Foreign Exchange strategist Karen Reichgott Fishman as follows.

Key quotes

President Christine Lagarde and her colleagues have more pressing issues to tackle before shifting their attention toward re-strengthening Europe’s common currency. High on that list are the ongoing surge in inflation, risks to energy supplies, and the deterioration of so-called peripheral bond markets, like Italy’s, whose issues are being exacerbated by ongoing political turmoil.

Concerns of fragmentation risks and elevated political uncertainty in Italy ultimately outweighed the initial upward pressure on the euro — highlighting the complicated set of challenges the single currency is facing at the moment.

While interventions by the world’s largest central banks have been rare in recent decades -- and when they do occur they’re typically coordinated among multiple monetary authorities -- the odds that Japan might do something will increase if the dollar-yen rate pushes even higher.

Also read: Forex Today: Europe in the eye of the storm

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