IFC Blog 
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May 22
2007
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Currency Exchange NewsPosted by DCC in Untagged |
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| Euro and Dollar Bloc currencies hit new highs | |
| With the Pound Sterling strengthening to 15 year highs of US$2.00, research highlights that a broad basket of currencies have also hit multi-year highs against the US dollar in the past fortnight, including the Euro, the Australian dollar and New Zealand dollar. | |
| Dollar bloc has seen strongest performance in past year According to the latest findings from Clerical Medical, the New Zealand dollar has strengthened the most out of the 'dollar bloc' currencies (Canadian, Australian and New Zealand dollars) against the US dollar over the past year, rising by 16 per cent, followed by a 9 per cent rise in the Australian dollar (the same increase as the British Pound). The Canadian dollar has been unchanged over the past year, although it has risen by 6 per cent in the past quarter. | |
There has been an 8 per cent appreciation in the Euro over the past year, taking the Euro to an all-time high of US$1.37, the highest level since its inception in January 1999.
Not all currencies have risen against the US dollar over the past year with the Japanese Yen slipping by 5 per cent against the Greenback.
The "Yen carry trade" by speculative investors, who borrow in Yen and then invest the proceeds in higher yielding currencies such as the Australian, New Zealand dollars and the Pound Sterling has depressed the Yen.
Small gains for Sterling against Euro and Australian Dollar
Even though the Pound has risen 11 per cent against the US dollar over the past year, it is only 2 per cent higher against the Euro and up 1 per cent against the Australian dollar over the past year.
Last Five Years
The Pound Sterling, the Euro and the Yen, along with the dollar bloc, have all appreciated against the US dollar over the past five years, highlighting that recent trends have been driven by US dollar weakness rather than local currency strength.
The largest rise against the US dollar over five years has been by the New Zealand dollar, which has appreciated by 65 per cent from 45.1 US cents in April 2002 to 74.3 US cents in April 2007. This was followed by a 53 per cent rise in the Australian dollar and a 52 per cent increase in the Euro. The Pound Sterling has risen by 37 per cent, while the Japanese Yen has appreciated by 7 per cent.
Mixed fortunes for the Pound over the last five years
Over the past five years, the Pound Sterling has risen by 37 per cent against the US dollar but has fallen by 10 per cent against both the Euro and the Australian dollar.
Clerical Medical Group Economist, Tim Crawford, said: "Not only the Pound Sterling, but a number of currencies, including the Euro, the Australian dollar and the New Zealand dollar have hit new highs against the US dollar in the past fortnight. This highlights that recent currency market moves are more about US dollar weakness rather than strength in other currencies.
“Even though the Pound has risen 11 per cent against the US dollar over the past year, its gains against other currencies have been less dramatic with, for example, only a 2 per cent rise against the Euro and a 1% increase against the Australian dollar over the past year.”
