Jakarta,- Coal prices continued to strengthen on the back of US interest rate cuts that weakened the dollar index (DXY).

Based on Refinitiv data, at the close of trading on Friday (8/11/2024), the ICE Newcastle benchmark coal price for the December contract rose 0.80% to US$ 144.25 per tonne. This is a two-day consecutive gain after previously rising to US$ 143.10 per tonne.

The Federal Reserve's (Fed) decision to cut interest rates by 25 basis points (bps) at this week's FOMC meeting was the main driver. The cut lowered interest rates to 4.50-4.75 per cent, giving a new boost to commodity markets, including coal. This is the second cut after the previous 50 bps cut in September.

The weakness in the dollar index was reflected in Friday's close with a 0.75% correction at 104. A weaker DXY makes dollar-denominated commodities cheaper for holders of other currencies, increasing demand.

‘US inflation is moving toward the 2% target, although it remains at elevated levels,’ the Fed wrote in its statement. Solid economic data and labour market stability, despite a slight rise in unemployment, added to market confidence.

This price increase provides a breath of fresh air for energy industry players after a period of pressure in recent months. If global sentiment is favourable, this positive trend has the potential to continue.

Sources : www.cnbcindonesia.com Nov 10.24