Central banks and monetary policy were the hot topics last week in the currency market.
Sweden's Riksbank set the ball rolling on Tuesday (28 October) by cutting its benchmark interest rate from 0.25 per cent to zero.
News of the move sent the Swedish krona to a five-year low against sterling.
The following day it was the turn of the US Federal Reserve to rattle investors' cages. It confirmed that it was bringing to an end its six-year-long programme of quantitative easing. A change in the wording of the accompanying statement sent the dollar higher because it implied that the first interest rate increase might come sooner than investors expect.
On Thursday (30 October) morning the Reserve Bank of New Zealand left its Official Cash Rate unchanged at 3.5 per cent and dropped a heavy hint that low inflation would mean a long wait for the next increase.
The governor once again described the high level of the Kiwi as 'unjustified and unsustainable' and investors obliged him by sending it lower.
Later in the day the Banco Central do Brasil raised its benchmark Selic rate from 11 per cent to 11.25 per cent, in response to above-target inflation. The 'real' strengthened briefly but by the end of Friday (31 October) was back where it had started.
That day's action took place in Japan and Russia. Bank Rossii raised its main rate from 8 per cent to 9.5 per cent, but the increase was only of fleeting help to the ruble, which remains close to a record low.
The biggest surprise came from the Bank of Japan. It increased the size of its quantitative easing programme by about a quarter to an annual ¥80 trillion (£450bn).
Japan also announced that it would be investing more of its pension fund abroad. Consequently the yen took a walloping that began on Friday morning and is still going on. It was the week's worst performer by far.
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