ECB HOLDS THE LINE Meanwhile, the European Central Bank (ECB) delivered a hefty 50-basis-point rate rise at its policy meeting on Thursday. ECB policymakers, led by President Christine Lagarde, sought to reassure investors that euro zone banks were resilient and that if anything, higher rates should bolster their margins. Had the ECB proceeded with a smaller rate hike, or even no increase at all, in light of the turmoil in the banking sector this week, that could have seriously spooked investors and prompted a far bigger sell-off, analysts said. Money markets are showing a much tamer outlook for interest rates than they have done of late, but with core inflation still rising and proving stubborn, there would be little justification for the central bank to refrain from more rate hikes, analysts said. Indeed, ECB policymaker Peter Kazimir and his peer, Gediminas Simkus, on Friday said the bank needed to keep raising rates for this reason. The euro was last up 0.1% against the dollar at $1.0618, and was flat against the pound at 87.59 pence. So far this week, the euro has struggled to make any headway against the dollar and has lost 0.8% against sterling. Sterling rose 0.17% to $1.213, while the Swiss franc rose 0.1%. Earlier in the week, the Swissie plunged by the most against the dollar in a day since 2015, when the Swiss central bank loosened its currency peg. The Japanese yen , which tends to benefit in times of extreme market volatility or stress, rose. It was last up 1% at 132.3 per dollar, set for a weekly rise of more than 1%. Japan's Ministry of Finance, Financial Services Agency and Bank of Japan officials met on Friday evening to discuss financial markets.
Masato Kanda, vice finance minister for international affairs, told reporters after the trilateral meeting that the government, the central bank and the banking watchdog would coordinate to ensure the stability of the financial system The Australian dollar , which often outperforms when investors are feeling optimistic, rose 0.5% to $0.6693, while the kiwi rose 0.7% to $0.6241. The Federal Reserve's monetary policy meeting next week now moves to centre stage. Some investors are hoping that the Fed could slow down on its aggressive rate-hike campaign in a bid to ease the stress on the financial sector. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Rae Wee in Singapore; Editing by Kirsten Donovan and Susan Fenton)
