Economists at Danske Bank talk about the probability of broad-based world coordinated FX intervention with the intent to weaken the USD. In their view, FX intervention to weaken the USD is presently now not aligned with US incentives to deliver down inflation.
Low likelihood of coordinated USD FX intervention
“We nonetheless assume the likelihood of broad-based international FX intervention to weaken the USD is very low; shut to zero percentage by way of end-2022 and 10% through end-2023.”
“A vital situation for coordinated G10 FX intervention is the US assisting such action. As lengthy as US inflation pressures are high, we do now not anticipate such support.”
“We warn towards concerning FX intervention as an fantastic device at this stage. In our view, current FX strikes are basically justified, FX intervention would solely enlarge market volatility and a weaker USD solely provides inflation pressures.”