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Monetary Policy Committee

Monetary Policy Committee. Financial Markets Developments. J. Pandoo Head – Financial Markets Operations Division 14 July 2014. Volatility Indices. 2-Year Yields in Selected European Countries. 10-Year Yields in Selected Countries. Exchange Rate Developments.

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Monetary Policy Committee

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  1. Monetary Policy Committee Financial Markets Developments J. Pandoo Head – Financial Markets Operations Division 14 July 2014

  2. Volatility Indices

  3. 2-Year Yields in Selected European Countries

  4. 10-Year Yields in Selected Countries

  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 • 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.

  12. Money Market

  13. Banks Excess Reserves

  14. Issuance of BOM Instruments & Banks’ Excess Reserves (Rsbn)

  15. Projection of Banks’ Excess Reserves (Rsbn)

  16. BoM Securities: Issuance and Maturing

  17. Maturity Profile of Bank of Mauritius Securities (Rsmn)

  18. Weighted Yield on T-Bills & T-Notes

  19. Yields on Long-Term GoM Bonds

  20. 3-Month Interest Rate Differentials

  21. 6-Month Interest Rate Differentials

  22. 12-Month Interest Rate Differentials

  23. BoM Intervention on Domestic Forex Market

  24. BoM External Assets

  25. Recent Policy Rate Cuts

  26. Recent Policy Rate Hikes

  27. Forecast of Policy Interest Rates

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

  29. Stock Market Developments

  30. MSCI World, Emerging & Frontier Market Indices

  31. Developed Market Indices & SEMDEX

  32. Emerging Market Indices & SEMDEX

  33. Foreign Investment on Local Stock Market

  34. 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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