Chinese YUAN rose first time since 1993 to a level of 6.5 versus US$ . As I told in last week that there is a growing expectation that central bank will allow this appreciation to curb the rising inflation. Appreciation of YUAN is making the imports cheaper for
. Yuan’s weekly gain is the longest since 2008 as it gains 7th straight weeks. China
Let see some other currencies this week –
US$ was weaker from the beginning of this week because investors were thinking that FED will continue to keep interest rates near zero when it meets in Tuesday and Wednesday . Higher rates make a currency more attractive to investors . Federal reserve said that they may keep interest near zero for an extended period of time , as economic growth is less than forecast in the first quarter .
U.S. Dollar weakening against the major currencies as Fed is increasing the supply of currencies by buying Treasury . Dollar index slipped for the 9th day as there is a concern that global economic growth is slowing .
What is happening as Fed is artificially trying to decrease the value of US$ by purchasing Treasuries . It is increasing the inflation risk on the one side , on the other side it also increases the prices of the commodities . This in turn is making the
US goods cheaper in abroad , so it is trying to help the exports from As US$ falls it is making cheaper for investors using other currencies to buy Gold and other precious metal as these metals priced in US$ . U.S.
Foreign funds bought nearly $7.9 billion stocks from
India , and Taiwanese ($1.2 bn) markets . South Korea Malaysia’s RINGGIT rose 2.2% , ’s RUPIAH gained 1.6% , Philippine’s PESO rose 1.4% and Thailand BAHT rose by 1.3% this week . Better economic growth in Indonesia Asia is the major cause of attracting of fund in these region’s stock and debt markets .
South African RAND now is in December 2010 level , though it can get support here but chart pattern is still lower highs and lower lows so unless that improves things are not changing much from here . Thursday Brazilian REAL tried to rise but like USD it also couldn’t carry it’s move . But it is getting some support at around 1.56-1.59 range . Euro hit it’s recent highest level of 1.488 , if things are going same way then it must try to beat the 1.50 level . I don’t know where Swiss Franc is going but it can touch more lower levels as it is not giving any positive signal .
AUD is saying – come and stop me , if you can . AUD advanced for a 6th week now , so this may fuel the speculation of rising interest rate in
. Japanese YEN is heading for a support at around 80.50-81 level . Australia
USD closed in it’s recent low of 72.834 level . As I was talking last week that there are no cause of rising USD from here . This week it plunged more . On Thursday it tried to make some ground but it failed to carry it . From the beginning of this year it is in the decreasing mode . In last 8 day’s rally it decreases during 7 days . Contrary to the AUD which rises 7 days out of 8 days . Everyone is expecting some rise in USD , even if it is for couple of days . I think better is not to look on the chart , because now days it is looking bad .
Asian and Emerging market’s currencies will appreciate for this moment , unless better news come from inflation side . Sometime I think every country who imports Crude Oil , they need to build huge reservoirs for this . So that they can store Crude Oil for couple of months , then short-term Crude movements will not effect them much .
( For charts – www.financialcharts.blogspot.com )
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