Foreign Currency Update

Foreign Currency Update.

The US Dollar rose slightly on higher interest expectations, (which incidentally sent global stock markets plunging), but has since given up its gains to remain at the bottom of a multi month range. Indeed, when comparing the plunge in the stock markets with the relatively muted move in the dollar index you would be hard pressed to find anycorrelation. The DXY Dollar index, (an index that measures the US Dollar’s valueagainst a basket of other currencies), rose from a low of 88.67 to hit 90.5 only to return to its lows again within a week or so. Against the Thai Baht the dollar moved from 31.44 to 31.83, before returning tomulti year lows at 31.28.

The British Pound dropped from a high of 1.4289to 1.3880 on the dollar’s interest rate driven rise but this was short lived as there was also news from the UK regarding a possible quicker and more robust move to a higher interest rate environment that kept the Pound well bid. Although the British currency didn’t hit last month’s highs, it regained ground to sit around the 1.39 to 1.41area, moving as high as 1.4120 before dropping back to 1.4039. Against the Thai Baht the Pound gave back last month’s gains and fell from 44.80 to 43.88.

The USD/JPY cross rate has seen some of the biggest moves amongst major currency pairs falling from 111.01 to 106.15 with safe haven trades likely partly to blame. The Yen is seen as a safe haven when stock markets are volatile and this has only exaggerated the move in the currency. Against the Thai Baht,the Yen recovered quite a bit of ground moving from 0.2846 to hit 0.2950.

The Russian Ruble weakened against the US Dollar during its temporary spike and moved from 56.20 to 58.65, before quickly retracing almost the entire move and settling back at 56.39. When compared to the Thai Baht, the Ruble fell from 0.5640 to briefly touch 0.5440 before staging a rally back to 0.5546. Thus it has not regained all of its strength and this is telling of a slightly stronger Thai Baht.

The Euro/USD rate moved from a high of 1.2514 to 1.2204 before recovering to an even higher high of 1.2553. Some give back occurred to see the Euro retrace back to 1.2418 against the USD. It remains near to multi-year highs even as the dollar has tried to rally somewhat. Against the Thai baht the Euro saw choppy trade albeit within a tight range of 38.70 to 39.10, suggesting that Euro strength is being matched by renewed strength in the Thai baht.