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Week ended 29th April, 2011 – Currencies this week .


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 China. Yuan’s weekly gain is the longest since 2008 as it gains 7th straight weeks.

Let see some other currencies this week –


CURRENCY
29th-Apr-2011
4/22/2011- 4/29/2011
4/15/2011-4/22/2011




EURO
1.48
1.71%
0.83%
AUD
1.097
2.14%
1.60%
YEN
81.14
-0.73%
-1.64%
RUPEE
44.38
0.18%
-0.49%
SWISS FRANC
0.868
-1.69%
-1.45%
S.African RAND
6.556
-2.25%
-1.23%
Brazilian REAL
1.574
0.63%
-0.82%
Mexican PESO
11.493
-0.92%
-0.46%



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 U.S. 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$ .

Foreign funds bought nearly $7.9 billion stocks from India , South Korea and Taiwanese ($1.2 bn) markets . Malaysia’s RINGGIT rose 2.2% , Indonesia’s RUPIAH gained 1.6% , Philippine’s PESO rose 1.4% and Thailand BAHT rose by 1.3% this week . Better economic growth in Asia is the major cause of attracting of fund in these region’s stock and debt markets .


Coming week

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 Australia . Japanese YEN is heading for a support at around 80.50-81 level .
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 .





NOTE :  Please see the disclaimer below this blog .





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