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Euro hits 10 month-high on dollar
REUTERS, Singapore
The euro sat at a 10-month high against the dollar on Thursday, ahead of a European Central Bank meeting at which markets expect a half-percentage point rate increase, a day after the US Federal Reserve slowed the pace of its rises to 25 basis points.
The Fed also said it had turned a corner in the fight against inflation, its first explicit acknowledgment that price increases are slowing, underpinning market expectations that the end of the central bank’s rate-rise campaign is near, and cuts could follow.
The dollar’s most dramatic overnight dive came after Fed Chair Jerome Powell told a post meeting news conference that “the disinflationary process has started”, although he also signalled that interest rates would continue rising and that cuts were not in the offing.
“It was very much a sort of relief ... that there was nothing there to really seriously challenge the market’s prevailing view,” said Ray Attrill, head of FX strategy at National Australia Bank (NAB).
“(Powell) said that rates are going to have to be restrictive for some time, but that doesn’t dissuade the market from saying some time might be six months, rather than two years.”
The Bank of England also meets on Thursday, with its rate decision due at 1200 GMT before the ECBs at 1315 GMT. Markets also expect a half-point increase from the British central bank.
Sterling, which rose 0.47 per cent on Wednesday, held at $1.236, and the dollar slid against the Japanese yen, dropping to as low as 128.07, its lowest in two weeks.
The euro hit $1.1034 in Asian trading on Thursday, its highest since April 4, having jumped 1.2 per cent on Wednesday. It was last at $1.100, broadly flat on the day, as the focus turned to the ECB meeting.
“A 50bp hike is widely expected as is a hawkish message that will support market pricing of a further 75-100bp of tightening into the summer,” said Chris Turner global head of markets at ING in a note.
“A sharp narrowing in rate differentials stands to become a bigger driver of EUR/USD this year and should carry it to the $1.15 area in the second quarter.
Turner said the derivatives market shows the smallest premium in dollar rates over euro equivalents since late 2021.
Also, among the sharper Wednesday movers were the Australian dollar, which gained 1.2 per cent on the day and hit a new eight-month high of $0.7158 in early Asia trade Thursday, and the Swiss franc which firmed to its strongest since late 2021 on Thursday.
Against a basket of currencies, the US dollar index fell over 1 per cent to a fresh nine-month low of 100.80 on Wednesday and traded just above that on Thursday.
Friday’s US nonfarm payrolls report will be the next test of the Fed’s fight against inflation, though official statistics on Wednesday showed that job openings had unexpectedly risen in December, pointing to a still-tight labour market.

PKSF scheme helps raise income of households: study
STAR BUSINESS REPORT
An initiative of the Palli Karma-Sahayak Foundation (PKSF), styled “Enhancing Resources and Increasing Capacities of Poor Households towards Elimination of Poverty (ENRICH)”, has helped increase the income and food intake of about 13 lakh households across Bangladesh, according to a study.
The integrated development programme was launched in 2010 with a total of 21 unions under its coverage. Since then, the ENRICH programme has expanded to cover some 56 lakh people across 197 unions in the country.
The average monthly income per capita of those living in these unions has increased to Tk 1,871 as of 2018 compared to the baseline of Tk 1,435 registered eight years prior, the study shows.
Martin Greeley, a professor of development studies at the University of Sussex, Asif M Shahan and Shubhasish Barua, associate professors of development studies at the University of Dhaka, jointly conducted the study from 2010 to 2018.
The researchers said this programme’s value should not be determined only by its nominal value as it has multidimensional social outcomes, including raising “human dignity” in society.
A book based on the study, titled “Sustainable Development, Human Dignity and Choice: Lessons from the ENRICH Program, Bangladesh”, was unveiled by the PKSF at its auditorium in Dhaka yesterday.
The study also found that the most significant change in terms of food intake took place in three unions, namely Saghata in Gaibandha, Durgapur in Netrokona and Simanto in Chuadanga, where almost 98 per cent of the locals now enjoy three meals per day.
The intake of animal protein also rose during this period.
In addition, around 53.6 per cent of the households surveyed now have health cards, which allows holders to receive services provided under the health component of ENRICH.
Previously, only 1.6 per cent of the households in unions under coverage had access to this benefit.
Besides, seven of the 10 unions surveyed saw a decline in the number of households without a lavatory.
Also, the dropout rate among primary school children in ENRICH unions has come down to 0.9 per cent whereas the national average is 4 per cent.
Along with economic empowerment, the PKSF programme focuses on enhancing human dignity and bringing down the number of ultra-poor people, according to Shahan.
The associate professor of development studies then said that no matter how much economic progress a person makes, they do not have the ability to change society if they themselves lack dignity.
Ensuring dignity means combining the capabilities of people functioning in a society in a way that helps ultra-poor people get equal respect, said Barua.
Speaking at the event as chief guest, Moshiur Rahman, the prime minister’s adviser on economic affairs, welcomed the concept of improving peoples’ dignity.
“The idea of dignity is not usually seen in discussions related to the economy or its growth. But in this study, dignity has been considered as an indicator of development, which is unprecedented,” he said.
Rahman hoped that the ENRICH programme would further expand in the future given its success so far.
Kazi Kholiquzzaman Ahmad, chairman of the PKSF, said under this programme, necessary services and support are provided at every stage of a person’s lifecycle so that they can make the best use of existing opportunities.
However, Ahmad informed that the finance ministry has suspended funding for the programme for the last three years.
And although the programme is ongoing, it is uncertain how long it will last without budgetary support, he added.
Among others, MA Baqui Khalily, a former professor at the University of Dhaka, and Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, also spoke at the event.