Shift in Course in Foreign Exchange Markets and Central Bank Policies

While the weakness of the euro in foreign exchange markets creates room for currencies such as the pound and the Swiss franc, central banks' interest rate policies and global risk sentiment accelerate the rotation in currency markets.

While the pound and the Swiss franc stand out against the euro, the Japanese yen comes back to the agenda in the search for a safe haven despite its volatile course. While the EUR/GBP parity declined by 2.38 percent in the last month and 4.83 percent on an annual basis, expectations that the Bank of England may go for an interest rate hike are strengthening in the markets.

The Swiss franc, on the other hand, carried its monthly gain to over 2.3 percent as the euro/franc parity, which was around 0.9460 at the end of September and early October, declined to the 0.9195-0.9200 band in the last week of October. Political and fiscal uncertainties in France and corrections in technology stocks were effective in this demand for the franc.

While the Japanese yen moved in two directions throughout October due to global expectations and interest rate differentials, the USD/JPY parity rose from 157.92 at the beginning of the month to 158.95 in the middle of the month and fell to 156.49 in the last week of the month with flight to safety. In Argentina, on the other hand, as elections in 2027 approach, although the Javier Milei government reduced inflation to 33.5 percent, the stagnation in the economy and criticisms that the peso is overvalued raise question marks regarding the sustainability of the model.