SBV injects liquidity at year start

This week, the SBV injected a modest amount of liquidity as exchange rate pressures eased. As a result, the interbank yield curve experienced a sharp decline in short tenors, signaling improved liquidity conditions in the interbank market this week. On the foreign exchange market, the DXY rallied after the holiday season, driven by anticipation of Donald Trump’s inauguration as the next U.S. president and the Fed’s recent hawkish tone, which bolstered the strength of the greenback. Despite this, domestic exchange rate pressures eased slightly, possibly due to the SBV’s actions in the interbank market to stabilize the situation. In the coming weeks, we anticipate that exchange rate pressures could persist, as market sentiment remains a key driver of the USD’s performance. However, favorable factors such as a robust trade surplus and year-end remittances are likely to support efforts to keep the exchange rate under control amid global macroeconomic developments.