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Week ended 22nd April, 2011 – Currencies this week

Most of the currencies have appreciated this week .


S.African RAND
Brazilian REAL
Mexican PESO

Rising interest rate are forcing many countries to increase interest rates .  Thailand increases it’s interest rate and Malaysia’s Ringgit is in 13-year high due to fear of hiking interest rate in coming days .

 That U.S. Government Debt outlook and also  ongoing debt problem in Euro Area have an effect of Euro’s performance.
Foreign institutes were on the buy side this week in many Emerging markets . That helps many of these currencies to rise this week . Chinese Yuan also rose on fear that government may agree to appreciate the currency to control the inflation , this is the highest level of Yuan since year  1997 . WON  is quite different from others this week as there was a talk that central bank would take step to stop this appreciation of currencies .

Coming week

AUD climbed to $1.0764 on Thursday , this was the highest level since 1983 . 1.06 level was crucial for AUD , since it broke that then it can go further higher levels from here .

In the initial days of the week Euro was decreasing but later it find some support at around 1.42 level and it bounced back from that level to again test the upper level of 1.452 and as such it broke it and now heading for higher levels . In coming week it will be testing the 1.46 level . For longer term view 1.45 level is very crucial for EURO .
South Africa’s RAND is heading for testing the support at around 6.6 level . It is making a pattern here and right now it is moving in a channel . Brazilian  REAL has broken it’s short-term support of 1.57 again and looking for more lower levels as it cannot carry it’s up move to break 1.59 level .
For Japanese YEN 81.5 level is good support . Now if it breaks that then it may be heading for 80.5 level , but if things improve then we may see it heading for 83.5 level . Where Swiss FRANC is heading is unknown to me , I thought that it may bounce back from previous week’s closing but it did not !

This type of fall in USD can take it into 72 level or better to say year 2008 lows . But in this moment is US economy is so bad like it was in 2008  ?   Experts are saying that low interest rate , inflation and budgetary deficit are the cause of this downward pressure of USD . I think U.S. economy is weak , unless the biggest concern of Deficit financing is gone out of window , things will not improve much .
I don’t see any fundamental reason for rise in USD from here , if any rise happens then it must be speculative or it may be a corrective rally from here . Give me any reason why should USD will rise for an long-term purpose from here ?

 ( For charts – )

NOTE :  Please see the disclaimer below this blog .

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