monetary policy committee · 4/28/2014 · 14-apr-14 ukraine 300 9.50% 3.40 mar-14 6.10% 2.8 7.9...

Financial Markets Developments

J. Pandoo

Head - Financial Markets Operations Division

28 April 2014

Monetary Policy Committee

© Bank of Mauritius

Volatility Indices

2

© Bank of Mauritius 3

2-Year Yields in Selected European Countries


10-Year Yields in Selected Countries

4


10-Year Bond Spreads to German Bunds

5


Exchange Rate Developments

6


Movements of EUR & GBP against USD

7


Exchange Rate Movements

8


Exchange Rate of Selected Currencies vis-à-vis the US Dollar

9


Exchange Rate of Selected Currencies vis-à-vis the Euro

10


Bloomberg Spot Forecast: EURUSD & GBPUSD

11


Exchange Rate Outlook

International

• The relative growth outlook is improving in US and UK compared to that in the Euro zone. The Fed and the BoE are expected to hike interest rate next year while more accommodative monetary policies are expected by the ECB. This set the scene for a USD and GBP uptrend and a Euro downtrend.

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

12


Money Market


Banks Excess Reserves

14

-1,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

Ap

r-13

May-1

3

Ju

n-1

3

Ju

l-13

Au

g-1

3

Sep

-13

Oct

-13

Nov-1

3

Dec-

13

Jan

-14

Feb

-14

Mar-1

4

Ap

r-14

Total Closing Excess Reserves Rupee Closing Excess Reserves

Rs million


Issuance of BOM Instruments & Banks’ Excess Reserves (Rs bn)

15


Projection of Banks’ Excess Reserves (Rs bn)

16


BoM Securities: Issuance and Maturing

17

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Au

g-1

2

Sep

-12

Oct

-12

Nov-1

2

Dec-

12

Jan

-13

Feb

-13

Mar-1

3

Ap

r-13

Ma

y-1

3

Ju

n-1

3

Ju

l-13

Au

g-1

3

Sep

-13

Oct

-13

Nov-1

3

Dec-

13

Jan

-14

Feb

-14

Mar-1

4

Ap

r-14

BoM Bills Matured BoM Notes Matured BoM Bills Issued

BoM Notes Issued 5-YR BoM Bonds Issued 15-YR BoM Bonds Issued

Rs million


Weighted Yield on T-Bills & T-Notes

18

1.5

1.8

2.1

2.4

2.7

3.0

3.3

3.6

3.9

4.2

4.5

4.8

5.1

5.4

5.7

6.0

6.3

6.6

6.9

7.2

1.5

1.8

2.1

2.4

2.7

3.0

3.3

3.6

3.9

4.2

4.5

4.8

5.1

5.4

5.7

6.0

6.3

6.6

6.9

7.2

Jul-

10A

ug-

10S

ep-1

0O

ct-1

0N

ov-1

0D

ec-1

0Ja

n-1

1F

eb-1

1M

ar-1

1A

pr-

11M

ay-1

1Ju

n-11

Jul-

11A

ug-

11S

ep-1

1O

ct-1

1N

ov-1

1D

ec-1

1Ja

n-1

2F

eb-1

2M

ar-1

2A

pr-

12M

ay-1

2Ju

n-12

Jul-

12A

ug-

12S

ep-1

2O

ct-1

2N

ov-1

2D

ec-1

2Ja

n-1

3F

eb-1

3M

ar-1

3A

pr-

13M

ay-1

3Ju

n-13

Jul-

13A

ug-

13S

ep-1

3O

ct-1

3N

ov-1

3D

ec-1

3Ja

n-1

4F

eb-1

4M

ar-1

4A

pr-

14

Per cent

91-D GMTB 273-D GMTB Key Repo Rate

182-D GMTB 364-D GMTB 3-Yr Treasury Notes

Upper Bound of Corridor Lower Bound of Corridor


Yields on Long-Term GoM Bonds

19


3-Month Interest Rate Differentials

20



21



22


BoM Intervention on Domestic Forex Market

23


BoM External Assets

24


Recent Policy Rate Cuts

25

DATE COUNTRY Policy

Rate

Inflation

Rate

Ref.

Period

Real

Policy Int

GDP

Growth

Unemploy-

ment Rate

GNS Budget

Balance

General Govt

Gross Debt

CAB

MAURITIUS 4.65% 4.5 1

Mar-14 0.15% 3.7 7.7 13.0 -3.2 52.4 -9.1

25-Mar-14 Hungary 10 2.60% 0.10 Mar-14 2.50% 1.2 10.9 19.6 -3.4 80.3 1.8

13-Mar-14 Chile 25 4.00% 3.5 Mar-14 0.50% 0.4 6.6 21.2 -0.8 11.4 -3.6

12-Mar-14 Thailand 25 2.00% 2.11 Mar-14 -0.11% 4.2 0.7 30.5 -3.4 48.2 1.1

26-Feb-14 Albania 25 2.75% 2.20 Mar-14 0.55% 2.5 10.5 13.1 -3.3 62.4 -9.0

24-Feb-14 Israel 25 0.75% 1.30 Mar-14 -0.55% 3.9 6.5 21.3 -3.1 73.2 2.5

18-Feb-14 Chile 25 4.25% 3.50 Mar-14 0.75% 0.4 6.6 21.2 -0.8 11.4 -3.6

18-Feb-14 Hungary 15 2.70% 0.10 Mar-14 2.50% 1.2 10.9 19.6 -3.4 80.3 1.8

11-Feb-14 Armenia 25 7.50% 3.80 Mar-14 3.70% 4.1 18.0 22.3 -8.2 42.2 5.5

4-Feb-14 Romania 25 3.50% 1.04 Mar-14 2.46% 2.0 6.9 23.8 -1.7 36.6 -4.5 1 Year-on-Year inflation rate. # Except Mauritius.

Source: http://www.tradingeconomics.com; http://www.cbrates.com; The Economist.

IMF ESTIMATES for 2014 (Apr-14 WEO) #

Rate

Cut

(bps) (%) (%) (% of GDP)


Recent Policy Rate Hikes

26

DATE COUNTRY Policy

Rate

Inflation

Rate

Ref.

Period

Real

Policy Int

Rate

GDP

Growth

Unemploy-

ment Rate

GNS Budget

Balance

General Govt

Gross Debt

CAB

MAURITIUS 4.65% 4.5 1

Mar-14 0.15% 3.7 7.7 13.0 -3.2 52.4 -9.1

24-Apr-14 New Zealand 25 3.00% 1.50 Mar-14 1.50% 2.6 6.0 14.8 -0.5 37.9 -6.0

14-Apr-14 Ukraine 300 9.50% 3.40 Mar-14 6.10% 2.8 7.9 9.6 -5.4 43.6 -7.8

2-Apr-14 Brazil 25 11.00% 6.15 Mar-14 4.85% 4.0 6.5 15.3 -1.7 65.9 -3.2

13-Mar-14 New Zealand 25 2.75% 1.50 Mar-14 1.25% 2.6 6.0 14.8 -0.5 37.9 -6.0

3-Mar-14 Russia 150 7.00% 6.90 Mar-14 0.10% 3.8 5.5 28.2 -1.0 11.8 1.6

26-Feb-14 Brazil 25 10.75% 6.15 Mar-14 4.60% 4.0 6.5 15.3 -1.7 65.9 -3.2

12-Feb-14 Georgia 25 4.00% 3.50 Mar-14 0.50% 6.0 13.3 17.8 -1.6 31.1 -8.4

6-Feb-14 Ghana 200 18.00% 14.50 Mar-14 3.50% 6.8 NA 11.8 -8.7 56.1 -10.1

1 Year-on-Year inflation rate. # Except Mauritius.

Source: http://www.tradingeconomics.com; http://www.cbrates.com; The Economist.

Rate

Hike

(bps) (%) (%) (% of GDP)

IMF ESTIMATES for 2014 (Apr-14 WEO) #


Forecast of Policy Interest Rates

27

(per cent)

Current Inflation

Official Rate

17-Apr-14Rate Jun-14 Sep-14 Dec-14 Mar-15 Jun-14 Sep-14 Dec-14 Mar-15

Global 2.35 2.35 2.35 2.35 2.38

Developed 0.32 0.34 0.33 0.33 0.35

Emerging 6.03 6.15 6.17 6.17 6.21

US 0.13 1.5 0.125 0.13 0.125 0.125 0.125 0.125 0.125 0.125

Euro area 0.25 0.5 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25

UK 0.50 1.6 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.75

Japan 0.05 1.5 - - - - 0.05 0.05 0.05 0.05

Canada 1.00 1.1 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Australia 2.50 2.7 2.50 2.25 2.25 2.50

New Zealand 3.00 1.5 3.25 3.25* 3.25 3.25 3.50

Brazil 11.00 6.2 11.25 11.25 11.25 11.75

Russia 7.00 6.9 7.00 6.75 6.50 6.25

India 8.00 8.3 8.00 8.25 8.50 8.50

China 6.00 2.4 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00

Indonesia 7.50 7.3 7.75 7.75 7.75 7.75

Malaysia 3.00 3.5 3.00 3.25 3.25 3.50

Thailand 2.00 2.1 2.00 2.00 2.00 2.25

Philippines 3.50 3.9 3.75 4.00 4.00 4.00

South Korea 2.50 1.3 2.50 2.50 2.50 2.75

Turkey 10.00 8.4 10.00 10.00 10.00 9.50

South Africa 5.50 5.9 5.75 6.00 6.00 6.25

* Latest.

REUTERS (16-Apr-14) JP MORGAN (17-Apr-14)


Policy Interest Rates (%) – GDP Weighted (JP Morgan)

28


Stock Market

Developments


MSCI World, Emerging & Frontier Market Indices

30


Developed Market Indices & SEMDEX

31


Emerging Market Indices & SEMDEX

32


Foreign Investment on Local Stock Market

33


Stock Market Outlook

International

• Global market equities are expected to benefit from the sustainable growth and an improving sales and earnings outlook for companies in developed economies. However, possible future interest rate hikes in major economies can lead to risk aversion and affect equity markets.

Domestic • The local stock market is expected to maintain its uptrend in

tandem with global equities although profit-taking and any potential retreat by foreign investors may somewhat limit its gains.

34


THANK YOU

35

monetary policy committee · 4/28/2014 · 14-apr-14 ukraine 300 9.50% 3.40 mar-14 6.10% 2.8 7.9...

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