USD/FJD Outlook:
The USD/FJD rate is currently below its recent average and near its recent lows, indicating a likely decrease. This trend is pressured by strong demand for the US dollar due to heightened geopolitical risks.
Key drivers:
• Rate gap: The US Federal Reserve remains firm in its monetary policy, contrasting with the Fijian Reserve Bank's more relaxed stance.
• Risk/commodities: With oil prices surging amid Middle East tensions, global demand for USD increases as oil is priced in USD.
• One macro factor: Fiji's forecasted economic growth of 3% for 2026 may not be enough to offset external pressures on the FJD.
Range:
The USD/FJD rate is expected to drift lower within its stable recent range.
What could change it:
• Upside risk: A resolution to the Middle East tensions could ease demand for safe-haven USD.
• Downside risk: Further oil price increases may increase USD demand, further pressuring the FJD.