Sunday, January 17, 2010

2 & 10- Year Currency Movement Summaries

Following up on this post about 2009 currency movements (Which was a follow up on this post about 2008 currency movements), I now give you first a 2-year summary and then a 10-year summary. As was noted before, the winners of 2008 performed relatively bad in 2008 and vice versa. However, while for example the Brazialian real and the Australian dollar made up for their entire 2008 loss and ended higher on December 31, 2009 than December 31, 2007, the British pound and the South Korean won was nearly a fifth lower in late 2009 compared to late 2007 despite recovering somewhat during 2009. Some inflationists might interpret the strong recoovery in South Korea in 2009 as evidence of the benefits of a debased currency, but that overlooks that Brazil and Australia aslso had relatively strong economies, while the U.K. economy remained weak. Here is then the aggregate 2-year change relative to the U.S. dollar:

Swiss franc:+9.4%
Singapore dollar:+2.3%
Australian dollar:+2.3%
Brazilian real:+2.1%
New Zealand dollar:-5.5%
Canadian dollar:-5.5%
Norwegian krone:-6.2%
Swedish krona:-9.7%
Indian rupee:-15.1%
U.K. pound:-18.5%
South Korean won:-19.6%

Looking at the 10-year movement, we see the Swiss franc has been the strongest, followed by the euro, the dollars of Australia, Canada and New Zealand and the Norwegian krone. However, given the low interest rates in Switzerland, investments in Australia and New Zealand would have been more profitable during the latest decade.

Another observation that can be made from this is that it is curios that people attack China so much for supposedly keeping its currency so low when the yuan in fact has been much stronger (+21.3%) during the latest decade than other Asian currencies, including the Singapore dollar (+18.0%), the yen (+9.8%), the South Korean won (-3.1%) and the Indian rupee(-6.4%).

Swiss franc: +53.8%
Euro: +41.1%
New Zealand dollar:+38.6%
Canadian dollar:+38.0%
Norwegian krone:+37.5%
Australian dollar:+36.9%
Swedish krona: +18.9%
Singapore dollar:+18.0%
Yen: +9.8%
Brazilian real: +3.6%
U.K. pound:+0.1%
South Korean won:-3.1%
Indian rupee:-6.4%