Bias: The USD/FJD exchange rate is range-bound, reflecting its position near the 90-day average and within a stable range over the last three months.
Key drivers:
- Rate gap: The Federal Reserve is expected to implement rate cuts, which could weaken the USD compared to the FJD, as the Reserve Bank of Fiji maintains its current policy stance.
- Risk/commodities: Crude oil prices remain relatively steady, leading to stable commodity revenue for Fiji, which supports the FJD.
- Macro factor: Fiji's improved economic growth forecast enhances investor confidence in the FJD, although upcoming elections could introduce uncertainties.
Range: The USD/FJD pair is likely to hover around its current level, potentially drifting within its established recent range.
What could change it:
- Upside risk: Strong US labor data could support higher demand for the USD if it strengthens perceptions of Fed policies.
- Downside risk: Increased geopolitical tensions involving the US could lead to a weakened USD, particularly if they affect market stability.
