Summary Of World Currency Markets For July 2008

Wednesday July 8, 2009

So how did the world’s top currencies – and countries - fare in July?  The bruised and battered South Korean won was certainly looking for a better month, while the US dollar probably would have been grateful for a relatively stable month after the ups and downs of recent times.

Meanwhile the Euro wasn’t looking as strong as it once had, and many other world currencies were struggling to maintain any kind of strength at all.  These are certainly tough times as far as Forex dealers and many other people are concerned – even if you are planning to go on vacation soon you would be best advised to stay close to that currency converter to see which locations will give you the best exchange rate for your cash.

An overview of the currency markets during July

So how did the US dollar do this month?

The US dollar has had its moments as far as the British pound is concerned over recent weeks, with the pound breaking through the two dollar barrier on more than one occasion.

July was a rather more stable month than we could have expected, although the dollar did dip a couple of times mid month.  The first of July saw an exchange rate of 0.5013 to the British pound, and it continued to climb marginally until the end of that first week, when the dollar ended on 0.5046.

By the end of trading on the following Monday the US dollar had reached an exchange rate of 0.5087, but was this signaling more to come or would it be unable to keep up the pressure?

In actual fact it was downhill from here on in, as the US currency slipped back to 0.5064 the very next day, and finished at 0.5046 by the close of play on Friday.  Whatever happened it never seemed as though the US dollar could hang on to any gains for very long.

But there was worse to come.  On the 15th it slipped even further and went under the 0.50 barrier, closing at 0.4975, although it barely managed to creep above the 0.50 mark by the end of the week.

It slipped below the 0.50 mark once more during the remainder of the month, and by the 31st we were looking at an exchange rate of 0.5053.  While this wasn’t the most fascinating tussle we’ve ever seen, it does illustrate that no currency or country is finding it easy at the moment, and quite often when one currency does nudge ahead of another one it’s not due to that one performing more strongly, it’s due to the other one performing badly.

So how did the US dollar do elsewhere?

Well it certainly had more of a tussle against the Euro, where it started the month off at an exchange rate of 0.6339 Euros to the dollar.  It dropped back to 0.6295 on the third, before upping its game and getting back into the 0.63 territory until the 15th, when it lost some ground again – albeit temporarily.

On the 17th the exchange rate was back to 0.6309, and with the exception of a single day it managed to stay around that level until the 29th when the US dollar put in a final flourish to end the month in style.

On the very next day it climbed up to 0.6414, and although it slipped back slightly on the last day of the month it still recorded a 0.0066 rise on the beginning of the trading month.  The question is, which of the two currencies (both known for being among the strongest ones in the world and yet both strangely vulnerable in recent times) will come out ahead next month?

In the battle of the dollars between the US and Hong Kong it was also an interesting month when once again the US dollar managed to gain a little ground overall.  7.798 Hong Kong dollars to the US dollar was the exchange rate we ended up with at the end of the first day of the month, and by the 7th we were looking at a rate of 7.800.  Was this going to be a month when the US dollar was going to batter another type of dollar, or was there more yet to come?

Well although the exchange rate dipped back to an incredible 7.999 Hong Kong dollars the next day, after that we were back into 7.800 territory again, and that’s where we stayed until the 15th, when the US dollar claimed 7.798 Hong Kong dollars.

And on and on it went, up and down virtually on a daily basis, with the final exchange rate benefit going to the US with 7.802 on the last day of the month.

But perhaps the best tussle of all was saved for the US dollar versus the Japanese yen.  Now these two had a memorable month last month, and as it turned out July was going to offer a repeat performance.  The first day ended with the US dollar claiming 105.59 Japanese yen, and from there it climbed steadily until the seventh day of the month saw it break through the 107 yen barrier.

Dropping back to 106.31 on the 11th, the US dollar then peaked briefly with an exchange rate of 106.79 on the Monday of the following week, before dropping sharply to 104.74 the very next day.  Was this the point where the rot would set in and the US dollar would begin to lose its grasp on the situation?  Japan was certainly hoping so.

But no, the end of the week saw the US dollar push back to claim an exchange rate of 106.87, and from here on in there was really only one direction it was going in.  On the 31st July the US dollar rounded out the month by claiming 108.26 Japanese yen – representing an overall rise of 2.67 yen to the US dollar over the course of the whole month.  Not a bad result for a currency that is having a tough time of it against many others at the moment.

Meanwhile, over in Europe…

Neither the Euro nor the British pound has been having a great time of it recently, and neither has looked particularly strong for any prolonged amount of time.  So it was always going to be interesting when the two of them went head to head.

The Euro got an exchange rate of 0.7909 against the British pound to kick the month off with, and it rose to 0.7992 on the third before dropping back slightly going into the weekend.  We were staying in 0.79 territory for some time yet, and while the Euro pushed to get past the 0.80 barrier it never quite managed to put in that extra effort it needed.  The stoic pound was having none of it.

In actual fact it wasn’t until the 23rd of the month that we saw some real action – but even then it wasn’t the Euro that won, it was the pound, as we saw an exchange rate at the end of that day of 0.7872.  The pound managed to hold on until the following week but on the 28th the Euro pushed back and won, with an advantage standing at 0.7925.

The Euro couldn’t press the advantage however and we were back to 0.78 the very next day, before finishing the month on 0.7889 – very little difference from where we started the month in the end.

Elsewhere the Euro had a very uneasy month against the Hong Kong dollar, starting at 12.302 Hong Kong dollars to the Euro before leaping up to 12.387 on the 3rd.  It then dropped back to an exchange rate of 12.220 before gradually gaining ground once again.

But this was a month of highs and lows – 12.208 was the rate applicable on the 7th, while just eight days later the Hong Kong dollar was pushed to 12.470 by the Euro.  But the very next day we’d fallen back to 12.390 again.  There was no clear path here to decide what would happen next; it was interesting to watch if you had no literal monetary interest in the exchange rate, but not so much fun if you were trading in the foreign exchange at the time!

As it turned out the high of the 15th would be the peak point of the whole month.  The Euro lost ground remarkably as the second half of the month unfolded, and in the end it limped back home with an exchange rate against the Hong Kong dollar of just 12.180 by the close of play on the 31st.  That represents a loss of 0.122 over the course of the month, and a sizeable 0.29 from that highest point. 

Needless to say we will be watching closely to see how erratic the Euro proves to be during August.

Elsewhere last month…

It was another month of ups and downs for the Canadian dollar when it went up against the Hong Kong dollar last month.  With a low point of 7.616 and a high point of 7.804 – a difference of 0.188 overall – we saw plenty of other exchange rates during the month as well.  There was no telling how things were going to turn out until they did.  This was certainly not a good time for the amateur Forex trader with uncertain nerves!

Elsewhere the Indian rupee had a month to remember against the Japanese yen, where it started off with an exchange rate of 2.4416.  After coming close on a couple of occasions it finally broke through the 2.50 barrier on the 18th of the month. 

It hit 2.568 against the Japanese yen on the 23rd, before losing some ground and finishing the month at an exchange rate of 2.555.

The yen had a better month against the New Zealand dollar however; it stayed in the 0.0123 to 0.0124 area for much of the month, before finishing on an exchange rate of 0.0126 on the 31st.  Not much activity you might think, but in the turbulent times we seem to be living in any gain is good and the yen will settle for this, that’s for certain.

Looking forward

July has certainly been an interesting month in the currency markets.  The US dollar hasn’t seemed quite so unstable as it has in the past, and indeed although it is far from strong at the moment some people are suggesting that it may soon regain some of its trademark strength and power – which seem to have been absent for quite some time now.

As far as the Euro is concerned however, renewed strength may yet be a long way off.  Conditions in the Euro region are far from stable and the economy is looking bleak.  Interest rates are hardly anything to celebrate and although other countries and currencies are also suffering, there is no doubt that Euroland has more to be concerned about than many other regions, purely because it encompasses so many different countries in one fell swoop.

Many people have pointed out that all previous attempts to bring in a single currency have failed, and they wonder whether the current testing times are going to prove too much for the Eurozone to cope with overall.  Only time will tell of course, but there is every possibility that those European countries that aren’t part of the Eurozone are going to be breathing a sigh of relief at the moment – even if their own situation is also far from rosy.

We have seen in recent months that the danger of a worldwide recession is never far away.  While it has still yet to materialize it feels as if we all have one eye over our shoulder and the question of our money and what it is worth is one that is also never far away.

So we will be back here as usual next month, ready and waiting to see which currencies will come out on top – if only temporarily.  See you then.