Standard Chartered: Fed Chair Warsh May Have Created a Barrier to Selling the Dollar

TREE NEWS reports: Standard Chartered says Federal Reserve Chair Kevin Warsh may have removed the biggest obstacle to buying the dollar while creating the biggest obstacle to selling it. The prior barrier to buying was currency-debasement concerns; the barrier to selling was that nominal and real rate differentials made the dollar unattractive as a funding currency, keeping hedging costs high for dollar-asset holders. Warsh may have cut resistance to short-term dollar gains, as the FOMC’s 25-basis-point rate hike reassured markets about chasing higher yields and raised hedging costs.