Summary Of World Currency Markets For June 2008

Wednesday July 8, 2009

May was a fascinating month in the world of currency.  The Asian markets were probably glad to see the back of it, as they were struggling against a number of other currencies, while the US dollar didn’t do too badly in contrast.

In Europe the Slovakian koruna was the one that was making the headlines, as it took on the might of the Euro and won.  The irony was that it is soon to be swallowed by the larger currency, so any joy at its strength is clearly not going to last that long.

But we’re moving on to June’s news now, so let’s take a look at what happened and see which currencies had the best results – and which ones struggled in comparison.

An overview of the currency markets during June

The rise and fall of the US dollar

Last month the US dollar was looking a little stronger in some areas, but if you compare this currency against the British pound for the month of June there was certainly a lot to chew over.  If you looked at a graph charting the events that the month had in store, it looked more like a rugged mountain range than a record of how these two currencies performed against each other.  There were more peaks and troughs here than you might have thought.

The first of June was a Sunday, and the US dollar sat at 0.5068 against the British pound from the end of the previous week.  The question was which currency would take an early lead for June.  Both currencies have been notable for their moments of strength and weakness over the past couple of months, and it was very likely that June would continue to show that same problem.

The dollar claimed the first blood, finishing that first Monday on 0.5099 against the pound.  Only a small rise – the question was whether it would continue on an upward trend or whether the pound would get the better of it.

Nothing much of note happened until the 4th when the US dollar managed to gain a little more ground, pushing upwards to 0.5109 pounds per dollar.  It managed to stay in the 0.51 area for a few days before dipping back to 0.5051 on the 9th of June.  Where would it go from there?

The good news for Americans using their currency converter to figure out how much their dollar would be worth in the UK was that it went back into 0.51 territory again.  But as the month wore on it became obvious that the pound wouldn’t give up ground so easily, and we saw a pattern of being at 0.50 one day, before going to the territory of 0.51 the next.

So it seemed that the ups and downs were only fairly minor compared to some other occasions, but there were certainly a lot of them.  By the final day of the month the dollar sat at 0.5025 against the pound – with very little difference against how things started.

So how did the US dollar do elsewhere?  In May the dollar certainly gave the Japanese yen a run for its money, but was the picture the same in June?

Well if you were expecting the sequel to the highs and lows that May offered, you wouldn’t have been disappointed.  This was a battle that was worth sitting back and paying attention to.

The dollar started the month at 105.58 against the yen, before dropping to 104.78 yen the very next day.  The pattern had begun.  The fifth of June saw the dollar claiming an impressive 106.12 yen, giving us a reminder of how things had gone the previous month.  Could we be in for another titanic battle?

It seems we were.  It stayed in the 106 region for a few days before climbing still further to 107.23 on the eleventh.  Things were looking good for anyone using their currency calculator to figure out how many Japanese yen they could get for their dollar on a vacation to that country – but they would have done well to wait, because yet more was in store just two days later.

Friday the thirteenth may be unlucky for some, and it certainly was for the yen.  The dollar managed to finish the week with an exchange rate of 108.27 against the yen, a trend that it managed to keep up until the Thursday of the following week when it dropped back slightly to 107.83.

That was when the rot set in and the tables started to turn as the Japanese yen started to mount a fight back.  We stayed in the region of 107 until the 27th, when the exchange rate dropped still further to 106.09 yen, and in fact there was worse to come, because by the last day of the month the dollar could only claim 105.58 Japanese yen, and the highs of the middle of the month were well and truly over.

The US dollar had quite a battle with the South Korean won in May as well as the yen, and June was very little different.  The dollar started with an exchange rate of 1028.75 against the won, and although it dropped to 1017.95 on the third, it had shot up to 1026.50 just two days later.

The ninth of June saw the dollar claim 1033.00 South Korean won, but even though it dropped sharply to 1027.50 the very next day, the biggest peaks were yet to come.

By Friday the thirteenth the US dollar was able to claim 1044.50 South Korean won, and although the following week saw a dip down to 1020.50 on the seventeenth, the dollar did win the day by the end of the month, where it finished with an exchange rate of 1048.09.  A slightly bruised and battered won will be wondering what the next month brings.

And what was happening in Europe?

It was a slightly jumpy month for the Euro when compared to the British pound, but neither currency gave a lot of ground to the other one, when the lowest exchange rate between the Euro and the pound was 0.7860 and the highest was just 0.7974.  There was no real drama here – just a prolonged struggle between the two that looks set to continue for some time to come.

The Slovakian koruna put up an impressive performance against the Euro that was soon to swallow it whole in May, but did things continue in this vein in June?

There actually wasn’t a lot of change from the high of 0.033 that it ended the month of May on, because it varied between a low of 0.032 and a high of 0.033 during June, so it certainly kept its moment of glory going on for a bit longer still.

The Euro had a better month against the US dollar, from a starting point of 1.550 on the first of June.  This slipped back to 1.546 on the fourth, but the dip was short lived and the Euro went into the first weekend of the month with an exchange rate of 1.559 against the dollar.

More good news was to come though, as the dollar’s prolonged weakness all around the world saw it dip against the Euro and it got pummeled by an exchange rate of 1.578 on the ninth.  But it fought back and the Euro ended the week on 1.533 dollars per Euro.

If that week was the week of the dollar, the following week was the week of the Euro.  The exchange rate by the end of that week was an impressive 1.561, and there was more to come as well.  In fact by the end of the month the Euro had finished by claiming 1.576 against the dollar – a strong finish to a good month for the currency.

Euroland is certainly going through its struggles at the moment, what with rising inflation and other factors as well.  But it definitely took on the US dollar and won last month: it only remains to be seen whether that winning streak can be continued into the future.

Elsewhere last month…

The Indian rupee lost ground against the Russian ruble last month; it started the month with an exchange rate of 0.5598 against the ruble, and while it managed to break through the 0.56 barrier the next day it dropped back to 0.5554 again just twenty four hours later.

It was the twentieth of the month that saw new lower territory for the rupee, as it finished the day at 0.5487 against the ruble.  From then on it only crawled back up to the heights of 0.55 for one day, before finishing the month at 0.5459 against the ruble.

The pound had a mixed month as well, but it came out the victor in a month long tussle with the Canadian dollar, which was certainly something to celebrate.  The first of the month saw an exchange rate of 1.956, which was soon to be topped as the pound climbed to claim 1.974 Canadian dollars on the third.  Two days later it was up again, to 1.991 Canadian dollars, and it seemed as if the magic two dollar barrier was about to be broken through.

It crept closer the next day, but we had to sit it out over the weekend before being rewarded with an exchange rate of 2.023 on the Monday.  It kept dipping above and below the two dollar mark over the rest of the month, but it was eventually the British pound that claimed a victory at the end of the month, as it finished with a healthy exchange rate of 2.012 against the Canadian dollar.

Elsewhere the Australian dollar claimed more against the New Zealand dollar as the month wore on.  It started on 1.222 before dipping to 1.218 the very next day.  But any thoughts of this setting a trend for the month were very much mistaken, as the Australian dollar started to get the upper hand on the fifth of the month, with an exchange rate of 1.247.

Most of the month was spent going to and fro between the 1.24 and the 1.25 mark, but from the twenty fourth onwards we were into 1.26 territory, with a figure of 1.2602 to end the month with.  Certainly a winning month for the Australian dollar, but it will be interesting to see whether it can continue its rise against the New Zealand dollar next month.

Looking forward

June certainly had its moments in the currency markets, and it was definitely worth keeping an eye on what was going on in all regions of the world.  There was no real tussle between any of the currencies that stood out among all the others, as is the case with some months.

This is probably not too much of a surprise given the woes of the world at the moment; the Eurozone is still struggling with inflation and the US dollar is still very weak against its competition, with no sign of any real and lasting change to come.

It is quite amazing the effect everyday events can have on currency exchange rates and performances, especially given that whatever country you are interested in has a whole different set of problems and challenges to meet every day.  While we look at how two particular currencies perform against each other during the month, we should bear in mind that other world events can also have a bearing on what is going on, given the fact that imports and exports are also often a factor.

So we will see how things progress in the month to come, as June makes way for July and a whole new set of dramatic events will no doubt unfold.  The main question is which currencies will be strong enough to weather the storms to come, and which ones will come off worse than the others?

Only time will tell – and we will be back here next month to take a fresh look at the world currency markets to get the answers.  See you then.