BNP Paribas: Liquidity withdrawal key to dollar recovery
Ian Stannard, senior foreign exchange strategist at BNP Paribas in London, said the injection of large amounts of central bank liquidity has been the driving force behind currency markets over the past year. “Understanding the impact of this liquidity on asset and money markets was crucial in forecasting currencies.”
Stannard said quantitative easing helped support risk appetite, lowering asset market volatility and, consequently, allowing higher risk assets and currencies to benefit. He said:
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