This week I’ve noticed that EURUSD rates seem to be pinned at around 1.05-1.06 for a while now. Which is odd. I mean Europe’s not doing that great. The real rate of interest keeps getting better in the US, and has kept getting worse in Europe, but the euro appreciated 10% anyway.
The pound is also ‘unusually strong’ against the dollar considering the sheer mass of problems the UK economy is facing. I mean it’s stubbornly staying 1.20-1.24 to the dollar, when just 2 months back it was 1.05ish and people were talking about pound-dollar parity. RPI running at 16% vs 3% rates? Whereas the dollar has inflation at 8% with 4% rates?
Yet the pound revalues up 20%? huh?
My personal theory is there is some kind of currency futures / swap arrangement between the US and the other central banks to try to prevent destruction of US export industries and to try and relieve inflationary pressures on Europe and the UK.
I don’t know if this could be found out, or how, if central banks would need to declare this publicly somewhere.