Summary Of 2010 Currency Movements
Previous years, my posts (see here for 2009 summary, and here for 2008 summary) summarizing yearly exchange rate movements have been very popular so I will write another one this year. As always, the yearly summaries fail to reflect some of the intra-year movements, yet they are still useful and interesting.
2010 was generally a weak year for the U.S. dollar, though not quite as weak as 2009. This was of course a result of QE2. The Australian dollar was for the second year in a row the second strongest currency of those included. The difference is that the yen, the Singapore dollar and the Swiss franc who were among the weakest currencies in 2009, was now together with the Aussie the strongest currencies. In the cases of the yen and the Swiss franc this was likely due to "safe haven" demand following the European debt panic, and in the case of the Singapore dollar this was due to a decision of the Singapore monetary authority to use the exchange rate to hold down consumer price inflation.
Other 2010 winners, like the Brazilian real and the New Zealand dollar had more moderate gains this year as Brazil imposed taxes on foreign investments to limit the appreciation of the real and as New Zealand raised interest rates a lot less than Australia.
And yet another 2010 winner, the Norwegian krone was along with the U.K. pound and the euro the only currencies to depreciate against the U.S. dollar. Considering the gain in oil prices that is somewhat mysterious and I am not sure of why it was so weak. It could perhaps be a reaction to 2009 over-shooting or it could be related to Norwegian authorities use of its sovereign wealth fund to hold down the value of the krone.
Why the euro was so weak seems obvious. The weakness of the pound is likely to be in part related to the new government's austerity program which have created expectations of continued rock bottom real interest rates.
As in previous years, the below numbers describe changes in value relative to the U.S. dollar.
Yen: +14.0%
Australian dollar: +12.7%
Swiss franc: +10.6%
Singapore dollar: +8.9%
New Zealand dollar: +6.0%
Swedish krona: +5.9%
Brazilian real: +4.7%
Canadian dollar: +4.5%
Indian rupee: +3.6%
Yuan: +3.4%
South Korean won: +2.9%
Norwegian krone: -1.7%
U.K pound: -4.8%
Euro: -7.4%
2010 was generally a weak year for the U.S. dollar, though not quite as weak as 2009. This was of course a result of QE2. The Australian dollar was for the second year in a row the second strongest currency of those included. The difference is that the yen, the Singapore dollar and the Swiss franc who were among the weakest currencies in 2009, was now together with the Aussie the strongest currencies. In the cases of the yen and the Swiss franc this was likely due to "safe haven" demand following the European debt panic, and in the case of the Singapore dollar this was due to a decision of the Singapore monetary authority to use the exchange rate to hold down consumer price inflation.
Other 2010 winners, like the Brazilian real and the New Zealand dollar had more moderate gains this year as Brazil imposed taxes on foreign investments to limit the appreciation of the real and as New Zealand raised interest rates a lot less than Australia.
And yet another 2010 winner, the Norwegian krone was along with the U.K. pound and the euro the only currencies to depreciate against the U.S. dollar. Considering the gain in oil prices that is somewhat mysterious and I am not sure of why it was so weak. It could perhaps be a reaction to 2009 over-shooting or it could be related to Norwegian authorities use of its sovereign wealth fund to hold down the value of the krone.
Why the euro was so weak seems obvious. The weakness of the pound is likely to be in part related to the new government's austerity program which have created expectations of continued rock bottom real interest rates.
As in previous years, the below numbers describe changes in value relative to the U.S. dollar.
Yen: +14.0%
Australian dollar: +12.7%
Swiss franc: +10.6%
Singapore dollar: +8.9%
New Zealand dollar: +6.0%
Swedish krona: +5.9%
Brazilian real: +4.7%
Canadian dollar: +4.5%
Indian rupee: +3.6%
Yuan: +3.4%
South Korean won: +2.9%
Norwegian krone: -1.7%
U.K pound: -4.8%
Euro: -7.4%
posted by stefankarlsson at 11:30 PM
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