World Forex Wrap-Up
- Published on Monday, 02 January 2012 18:49
- David Simmons
- 0 Comments
The slowing of the global economy is now prompting investors to turn towards the safer currencies, the US dollar and the Japanese yen. The euro has seen a very bad month, posting the biggest monthly decline versus the yen. This change in the perception of the market reflects the changes that have taken place in the world economy over the past few months, with the dollar coming through with some nice gains against the euro.
The dollar climbed 1.5 per cent to $ 1.3387 versus the euro, thereby lengthening its rise in the past one month to 7.3 per cent. The Japanese yen lasso added 1.3 per cent against the euro to be valued 103.12 per euro, and being comfortably set for a 7 per cent improvement this month. The US dollar rose 0.3 per cent to 77.06 yen, after having touched the highest level in over two weeks. The dollar has gained 7.1 per cent in the past quarter while the Japanese yen has been the best performer among the advanced economies currency, having ascended 12.6 per cent. The euro on the other hand has fallen by 2 per cent.
As far as other currencies are concerned the New Zealand dollar suffered a second week of depreciation against the greenback after Standard & Poor’s also joined the bandwagon and slashed the country’s rating. The country’s AAA ratings were reduced to AA+. The NZ dollar has now had a decline of 11 per cent over the past one month, while in the past one week the kiwi, as the currency is called, has had losses of over 2 per cent.
The Swiss franc has seen appreciation even after the Swiss National Bank (SNB) put a cap on the exchange rate of the CHF. The SNB had imposed an upper ceiling of 1.20 per euro over the franc and yet the franc has seen a rise of 0.6 per cent. The SNB has vowed to maintain this cap with its whole hearted determination.
There are signs that the European Central Bank will be lowering the borrowing rates so as to battle the ever worsening European debt crisis. There is a ECB policy meeting scheduled on 6th October and many experts believe that the first rate cut will come then with many more to follow through the year. There are estimated to be rate cuts worth 40 basis points over the coming twelve months.