RBA's Debelle: Cross currency basis may not be sign of stress - Reuters

Eren Sengezer FXStreet

Reserve Bank of Australia (RBA) deputy governor Guy Debelle crossed the wires, via Reuters, suggesting that an increase in the cross currency basis may not be a sign of stress and can be consistent with functioning markets.

Key quotes (via Reuters):

More comfortable with the idea that increase in cross currency basis is not always a sign of market stress
Increase in the basis can be consistent with functioning markets
Wouldn't lose sleep over higher basis the "way that I literally lost sleep over it in 2008"
RBA's return enhancement offered by the basis is "highly beneficial"
RBA can swap a$ into yen for domestic liquidity management, can earn "substantial return" by swapping various reserve currencies it holds in yen

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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