From AI hype to uncertain China's reopening: join the international broker OctaFX as it compiles the 12 most important events that shaped the Forex market in the past year.

KUALA LUMPUR, MALAYSIA - Media OutReach - 9 August 2023 - The past year thoroughly shook the financial markets and had a lasting impact on the Forex market. As OctaFX celebrates its 12th anniversary, the company took this opportunity to compile a list of the most important events in the world of finance, along with their implications for investors and traders in 2023 and 2024.

• The end of the U.S. Federal Reserve interest rate hike cycle.

Starting in March 2022, the U.S. regulator began tightening the monetary policy to combat accelerating inflation. Ten rate hikes followed, including four consecutive 75 basis point increases. By early May 2023, the rate peaked at 5–5.25%, where it stayed for two months. In July, the Fed raised the rate again by 25 basis points, from 5.25% to 5.5%. This aggressive tightening earned the label 'historic' from analysts.

• The inflationary shock is over.

Until the beginning of 2023, developed countries were grappling with record inflation, attributed to pandemic-induced demand stimulus, supply shocks, and disruptions in the supply chain. By June 2022, the U.S. reported a 9.1% consumer inflation peak, while in October, the U.K. and the EU inflation peaked at 11.1% and 10.6%, respectively. Thanks to the efforts of central banks worldwide, inflations began to show signs of retreat towards the end of 2022. In June 2023, the U.S. economy reported a 3% inflation rate, with other countries also showing a decline in consumer inflation.

• The euro falls below parity with the U.S. dollar.

Inflation fever and decisive actions by regulators caused investors to avoid risk and actively invest in safe-haven assets. Due to the central banks of Europe and the U.K. acting with a time lag compared to the U.S. Fed, there was a gap in rates and yields of government bonds. As a result, the dollar index against world currencies reached a 20-year high in October 2022, leading to the euro's exchange rate against the U.S. dollar falling to 0.9880.

• Malaysia proposes the establishment of the Asian Monetary Fund.

The global trend of de-dollarisation is gaining momentum, especially in Malaysia, where the establishment of the Asian Monetary Fund (AMF) was proposed as an alternative to IMF. Malaysia's Prime Minister Anwar Ibrahim reintroduced the concept of the AMF in March 2023, citing the economic strength of countries like China and Japan. His proposal was supported by China and some Southeast Asian countries, reflecting a growing desire among BRICS countries to move away from the dollar-centric financial system.

• Brazil and China establish the yuan-based clearing house for direct settlement.

On 29 March 2023, China and Brazil announced the establishment of a clearing house to facilitate direct settlement between the two countries without converting their currencies into dollars. This move aimed at making transactions cheaper and faster, ultimately bolstering trade and investment expansion. China has been Brazil's key partner for the past 13 years, with its trade turnover amounting to $150 billion in 2022. Additionally, Brazil has been a major recipient of Chinese investments, mainly in the development of oil fields.

• China's economy restarts after zero-Covid policy.

Following its emergence from the COVID-19 pandemic, China experienced a remarkable economic recovery. By mid-2023, the country's economic activity, domestic tourism, and international travel nearly fully rebounded, leading to numerous agreements to facilitate international business and trade. To address uneven growth in the first five months of 2023, the Chinese government implemented measures to support businesses and boost consumption while maintaining tight monetary and fiscal policies. Amidst an ongoing recession in G7 and EU countries, China's reopening and deepening relations with the Middle East and BRICS nations have significant implications for de-dollarisation and deglobalisation. According to the IMF's April 2023 Growth Outlook Survey, the Asian region will account for about 70% of global growth, while the G7 and EU economies will shrink, resulting in a 7% decline in global GDP. At the same time, the IMF raised its growth forecast for Asia-Pacific economies to 4.6% in 2023. 'These deglobalisation processes are causing a decline in the popularity of the dollar, leading to an increase in the dollar money supply and its consequent depreciation. However, these shifts are global in nature and might extend over the long term,' said Kar Yong And, the OctaFX financial market analyst.

• Cryptocurrencies face an uncertain future.

The cryptocurrency market experienced a turbulent 2022, with sharp fluctuations in the value of Bitcoin causing panic among investors. Reports of cryptocurrency exchanges facing insolvency added to the overall uncertainty. On 11 November 2022,...