Foreign Currency Update

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Foreign Currency Update.

There has been a significant rise in the US Dollar’s value over the last month, with a rising interest rate outlook and political news mainly driving the move. The DXY Dollar index, (an index that measures the US Dollar’s valueagainst a number of other currencies), rose from a low of 90.26 to hit 94.01. Whether or not there will be continuation of the move remains to be seen. Against the Thai Baht, the Dollar advanced from 31.52 to 32.12, indicating that the pair may have bottomed in the short term.

Any holder of British Pounds has suffered quite some pain over the last 4 weeks with the currency falling from its high of 1.4378 back to 1.4050 then to 1.3720 then down quickly to 1.3310. This very large drop so far has no signs of stopping and it is interesting that whilst the dollar has strengthenedby some four per cent, the pound has dropped by over seven per cent, showing that the pound has suffered its own weakness. A hold on interest rates by the Bank of England has only helped to make the pound look less attractive. A technical rebound may occur but it is likely to be only a temporary move. Against the Thai baht the British Pound dropped from 44.01 to 42.80

The US Dollar vs. Japanese Yen cross rate continues to rise moving from 107.61 to 111.35 in short order, before dropping back to 109.90. Much of this has to do with the U.S. Dollar’s rise rather than Yen weakness. This is evidenced by the fact that against the Thai baht, the rate for the Japanese Yen remaining relatively steady, moving from 0.291 to 0.292, a very tiny move indeed.

The Russian Ruble has leveled of somewhat after last month’s volatility but still saw a measured leap from 61.80 to the US Dollar to 63.90 before dropping back to 61.70. Expect volatility to remain a possibility going forward. Against the Thai baht the Ruble dropped from 0.5088 to 0.4955 before regaining its poise to move to 0.5210.

The Euro has taken quite a drubbing against the dollar and since the European currency makes up half the weighting of the dollar index this is to be expected, given the recent Dollar rise.The Euro has moved quite dramatically from 1.2240 to the U.S. Dollar all the way down to 117.06. The move happened in a continuous and relentless drip-drip fashion that would have frustrated Euro bulls. There may be a pause at 117.00 based on technical analysis, but a reversal is likely to be short lived, if it occurs at all. Against the Thai baht the Euro lost almost a full Baht’s worth of value falling from 38.48 down to 37.56.