China’s demand for commodities is receding as the global growth outlook gets bleaker. And global risk aversion and a strong dollar across the board are other factors adding to the misery of several currencies. The AUD is down by more than 8% versus the USD since the beginning of April, and the NZD is down by more than 9% during the same period. Surprisingly, the NOK is the hardest hit even though the oil price maintains levels around USD 105/barrel, NOK is down 11% vs the dollar over the past six weeks. Low growth and fear of deflation after the global financial crisis in 2007-09 left central banks unhappy with currency appreciation. Now it has all turned upside down. Today, few central banks want a weaker currency. And the sharp depreciation of several commodity currencies might result in a much quicker tightening of monetary policy than would otherwise have been the case in these countries. - Nordea
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