Reserve bank of
left it’s interest rate unchanged , probably they are preferring to AUD to do this job . Most of the currencies decrease this week . Australia
ECB’s decision of not to increase the interest rate is one of the important topic this week . Most are explaining this interest matter of ECB is the cause behind USD’s sudden rise this week .
I think to some extent ECB’s decision is right because if they rise interest rate then PIGS countries will suffer more as their economic growth may hamper with that increase in interest rate . When they have a weapon to control inflation with the appreciation of Euro then they must depend on it rather than rate hike .
Most of the currencies of Asian countries close weak this week , as bad news came from
recovery . Currencies were in pressure due to the outlook about their exports . US Thailand’s BHAT slid the most this week due to the political tension , ’s RINGGIT also decreases lot this week . YEN was 7 week high against the Malaysia $ on Thursday . Japanese authorities think fall in commodity prices ( which trades in US$ ) is the cause of rise in YEN , so the situation is different from past when G-7 intervened in the market to control the YEN . Somewhere I was reading that Japanese authorities have not reacted to YEN’s strength unless it has impacted on their share prices . US
Brazilian REAL is bouncing back from it’s 1.56 level though it is finding some resistance at around 1.62 level but it may take time to overcome this level . South African ran also get previously tested support of 6.6 level . Most of the Emerging market currencies bounce back this week .
Now what can be the cause of this increase in USD . As I said that one cause may be the statement from ECB that interest rate will not be raised during next month ! And the second one is there may be some insiders buying dollars suspecting that since QE2 is going to end so printing of moneys will stop and so there can be damage in the markets . But some experts are sure that this sudden strength in US$ is not going to stay for long .
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