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The U.S. Treasury Department has urged the Bank of Japan (BOJ) to continue tightening its monetary policy to address the yen's weakness and promote a rebalancing of trade. The report highlights that Japan's ultra-low interest rates contribute to the yen's depreciation against the dollar, with the BOJ's gradual rate hikes being closely monitored. Despite recent increases, economists expect the BOJ to maintain steady rates through September, with a potential hike by year-end.
The Indian rupee has weakened following a significant rate cut by the Reserve Bank of India, prompting speculation that it may be an opportune moment for Non-Resident Indians (NRIs) to transfer funds. This financial shift could influence remittance strategies and investment decisions among the diaspora.
dLocal is set to acquire AZA Finance, a leading African fintech specializing in cross-border payments, for approximately $150 million, pending regulatory approval. This acquisition will enhance dLocal's operations in Africa, increasing cross-border volumes and improving service for its global merchants. AZA Finance's expertise in foreign exchange and local markets will further bolster dLocal's capabilities in the region.
Japan’s Nikkei share average fell 1.3% to 37,470.67 amid concerns over escalating U.S.-China trade tensions and a stronger yen, which negatively impacted automakers. The yen rose 0.6% against the dollar, further pressuring exporter stocks, while the auto sector and chip-related shares saw significant declines. T&D Holdings, however, gained 4% following news of an activist investor acquiring a stake in the company.
The Comprehensive Economic Partnership Agreement (CEPA) between the UAE and Serbia took effect on June 1, 2025, aiming to eliminate or reduce tariffs on over 96% of product lines. This deal is projected to boost the UAE’s GDP by $351 million by 2031 and enhance bilateral trade, which reached $121.4 million in 2024. The agreement supports increased investment flows and market access across various sectors, with Serbia being the UAE’s largest trade partner in the Balkans.
Japan plans to increase its foreign direct investment target to 150 trillion yen ($1.05 trillion) by the mid-2030s, a 20% rise from the previous goal of 100 trillion yen by 2030. This initiative aims to attract foreign firms to key sectors like decarbonisation, stimulate regional economies, and create jobs outside major urban areas. The new targets will be included in upcoming fiscal and economic policy guidelines.
The Indian rupee has dropped to 23.30 against the UAE dirham, with expectations of further decline as the dollar strengthens. This follows a trend since February when the rupee hit a record low of 23.92, influenced by market reactions to U.S. economic concerns and import tariffs. Manoj Nair, a seasoned financial journalist, continues to monitor shifts in the property, gold, and retail sectors while enjoying classic Bollywood films in his leisure time.
The CIO anticipates renewed weakness in the US dollar as the economy slows and fiscal deficits come into focus. Despite a recent rebound, the dollar is expected to decline further, prompting recommendations for investors to reduce USD exposure and diversify into currencies like the yen, euro, and British pound. The unsustainable twin deficits and potential changes in Fed leadership may exacerbate this trend.
The G7 meeting reaffirmed its commitment to free-floating exchange rates, avoiding competitive devaluations, while expressing concerns over unfair trade practices and macro imbalances, particularly regarding China's trade surplus. US Treasury holdings have decreased by $30 billion since April, with anticipation building for the upcoming TIC data release. Despite lower realized FX volatility, expected volatility remains high for EUR/USD and USD/JPY, indicating investor caution ahead of significant events.
Deutsche Bank's research indicates that the US dollar must depreciate by 40% to eliminate the trade deficit, a reversal of its 15-year appreciation driven by fiscal and monetary policies. Relying solely on tariffs is insufficient, as they could lead to inflation and reduced exports. Meanwhile, Morgan Stanley forecasts continued dollar depreciation, predicting a drop to 91 by mid-2026 due to diminishing growth and yield advantages.
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