Summary Of World Currency Markets For November 2008

Wednesday July 8, 2009

Welcome back to our monthly report on what is going on with the major currencies all around the world.  Last time we saw that the world economy was having a major effect on how various different currencies were behaving with each other in the currency markets.  If you had your currency converter handy you might have seen very different results on one day to the ones you had seen even the day before.

This is very typical of what we should be expecting to see for the foreseeable future too.  Some countries (and their currencies) will no doubt have a rougher time than others; pound sterling is one in particular which has lost a lot of value against the US dollar of late.  And as things stand there is no reason why we shouldn’t expect this to continue into the future.

The Euro also seemed to be very weak last month, and we shall take a look and see what it managed to do during November too in just a moment.  But we start as ever with the US dollar’s performance against the British pound – and we have a feeling we already know what to expect.

An overview of the currency markets during November

A look at the performance of the US dollar against the other major world currencies
Last month the exchange rate between the US dollar and the British pound finished on 0.6168, so the Americans were looking to improve on that as soon as possible – especially given their good performance the month before.

It was certainly going to be a month of ups and downs, but the increases for the dollar started on the 3rd, when they managed to break through the 0.62 barrier and claim an exchange rate of 0.6215.  Three days later things improved still more and the exchange rate stood at 0.6303.

On the other side of that weekend, as the 12th of the month finished in the currency markets, the Americans managed to improve on their performance and claim a rate of 0.6569.  That represented a big leap up – and something that they would clearly want to build on.

But did they manage to do it? 

As it happened the answer came on the very next day.  By the close of play on that occasion the pound limped back home, having been taken to an exchange rate of 0.6740.

It got slightly worse for the pound going into that weekend, as it registered a rate of 0.6783.  But as it turned out that would be as high as the dollar could take things for the month of November.

By the end of the 18th it dropped back to 0.6655, and it only managed to get back into 0.67 territory on the 20th of the month, before going back down and staying there for the rest of the month.

By the time the currency markets closed on the 28th of the month for the weekend, the exchange rate stood at 0.6520.  But that still represented an increase of 0.0352 over the course of the month – and a pound that looked increasingly battered by the US dollar.

Last month we saw a bad result for the Euro, and a good one for the US dollar as it claimed a lot of ground against the European currency.  With an exchange rate standing at 0.7838 by the close of play, we were left wondering whether the Euro could fight back at all during November.

So here is what happened.  If you bear in mind up front that between the first and last days of the month there were more ups and downs than we have seen in a long time, you might just be surprised at the starting and ending figures we ended up seeing!

In October the exchange rate ended on 0.7838.  Things slipped slightly on the 3rd, as the rate went down to 0.7799, but it was back up to score an even 0.7800 the next day.  The exchange rate toyed between the 0.77 and 0.78 mark until the 12th of the month, when it managed to push up slightly to claim an exchange rate of 0.7980.

Did this mean the dollar was exerting more pressure to result in a better second half of the month than the first half?  As it happened, perhaps not – if you were to see the graph of the ups and downs between these two currencies for the whole month you would see plenty of dips and troughs, as well as the peaks for the US dollar.

The figures dipped back into 0.78 territory on the 14th, and stayed there until the 18th when it went up to 0.7903.  But even though it looked better at this stage and stayed at that kind of level for a few days, it couldn’t quite maintain it and by the 24th the exchange rate had gone back down at was sitting at 0.7829 again.

This was a real tussle as it turned out – for once it seemed as if the US dollar couldn’t really get hold of any ground and keep it.  Instead it would slip back again, but whether this was a result of a weaker dollar or a stronger Euro, it was hard to tell.

On the 26th the exchange rate slipped back into 0.77 territory again, but by the time the end of the month came and the markets closed on the Friday going into that final weekend, the exchange rate between the US dollar and the Euro stood at 0.7857.  In the end, that meant the US dollar had only gained the total of 0.0019 over the Euro for the whole of the month.  That might seem hard to believe given the ups and downs, but it all evened out in the end, as our figures show.

Now let’s move across the ocean again and see how the US dollar stood up to the Hong Kong dollar.  In October it was the Hong Kong dollar that did the better of the two, so could it perform equally as well this time?

7.751 was the closing figure in October, and although the US dollar slipped back to 7.7499 on the 11th, it was back up to 7.7509 the very next day.  And that is where it stayed for the rest of the month, recording an exchange rate of 7.7505 on the closing day of trading in November.

That meant there was very little difference at all between the two during November, so we’ll have to see which one gets the upper hand during December.

Finally it’s on to the Japanese yen, which did rather well against the US dollar last month.  The closing exchange rate of 97.96 represented a drop of 7.24 over the course of October, so could the US dollar do any better this time?

It pushed back up to 98.564 on the 3rd of the month, and increased that a little further by the 5th, but the high point came as early as the 4th, when the US dollar managed to claim 98.564 Japanese yen as the exchange rate.  If you had a currency converter handy though, you would have seen reduced figures for the forthcoming days and weeks.

Just two days later we were looking at an exchange rate of 97.776 – and even though 99.208 was achieved on the 10th, that was pretty much the best news of the month been and gone already.

The 21st of November brought a low point of 94.667, as the US dollar seemed to lose what was necessary to go up against the Japanese yen and win.  By the end of the month the exchange rate stood at 95.434 – which makes a loss of 2.53 for the month as a whole.

So once again we can see that the US dollar doesn’t always win against every single currency it goes up against.

Meanwhile, over in Europe…

Once again it’s time to take a quick look at the two major currencies in use over in Europe – the Euro and the British pound.  Last time we saw that the pound had just about managed to claim a small victory for the month of October – so could it do the same or better during November?

1.2708 was the starting point, and by the 4th that had slipped back to 1.2383.  After an attempt to push back to 1.2422 two days later, we had even worse news as the pound tumbled to a low of 1.1630 on the 14th.

The pound then began something of a fight back and claimed 1.1907 Euros by the time we got to the 19th.  But was it enough to regain all the ground it had lost by the end of the month?

As things developed it became obvious that it was far from enough.  This was due to the fact that the exchange rate eventually stood at 1.1713 on the 25th of the month.  And even though the pound managed to improve on that still further to register an exchange rate against the Euro of 1.2049 by the close of play on that last Friday in November, it wasn’t enough to achieve the result they had been hoping for.

In the end 0.0659 was the amount lost by the pound during the whole of the month, so it was far from being a success.  The Euro was the clear winner here – and it will be interesting to see whether it can build on that during December.

Elsewhere last month…

The US dollar enjoyed a good month against the New Zealand dollar.  It started off claiming 1.7156 at the beginning of the month, and although it dropped back to 1.6461 on the 4th, this turned out to be nothing but a minor distraction and nothing to worry about for the Americans.

The high point was on the 21st, when the US dollar managed to claim 1.8928 New Zealand dollars, but that did fall back somewhat as soon as the next week’s trading started.

In the end they finished on 1.8238 New Zealand dollars, but that exchange rate meant that the US dollar had gained nearly eleven cents over the course of the month – making it a good time for travelling to this particular country.

It is always interesting to see how Australia and New Zealand do against each other, and since the US dollar was clearly out in front against New Zealand’s dollar, how did Australia do?

The answer was that it did equally well.  On the first of the month the Australian dollar could be exchanged for 1.1371 New Zealand dollars, and as time went on the figure gradually climbed higher.  By the time the month was over the exchange rate had improved to 1.1883 – proving that this was a month the New Zealanders would rather forget.

Looking forward

So clearly this was another month of winners and losers – but perhaps not always the ones we had expected.

In the times we are in we should really expect to see bad results in some areas, because some countries are clearly coping better with the economic downturn than others.  But how long will this continue for?  It seems too much to expect that countries such as the US will remain relatively untouched in terms of their currency than others, so maybe we will see a weakening of the US dollar as well in times to come.

Whatever happens, we will continue to monitor various currencies to see how they do against each other.  It is clear that some have good months and bad months, and overall it is the general trend that can be more interesting.  But no matter which country you are in, it is your own currency and the power it has over others in the world that will be of interest to you.

So keep tabs on what is going on and make sure that you keep an eye on the economic developments in your own region – because these can have a big effect overall.

See you next month.