USD/WST Outlook: Slightly weaker, but likely to move sideways as the exchange rate is below its recent average and near recent lows, indicating limited movement.
Key drivers:
• Rate gap: The Federal Reserve's anticipated policy easing may pressure the US dollar, while the Central Bank of Samoa is tightening to manage excess liquidity, which supports the currency.
• Risk/commodities: Oil prices have been fluctuating, with increases impacting the US dollar due to inflation concerns, while stable prices may help the Samoan economy.
• One macro factor: The Samoan economy is expected to grow modestly, driven by government spending and better tourism revenues, contributing to a stable currency outlook.
Range: Movement is likely to hold steady within the recent range without significant volatility expected.
What could change it:
• Upside risk: A stronger-than-expected US inflation report could lead to a shift in Federal Reserve rate cut expectations, boosting the US dollar.
• Downside risk: Emergence of new geopolitical tensions or economic setbacks in Samoa could negatively affect the Tālā's value.
