Asian currencies weaken against U.S. dollar

Several Asian currencies fell in the forex market today after four consecutive days of gains. General risk sentiment has decreased due to uncertainties in Europe, mainly that Greece might not be able to get their balance sheet in order in time to present it to the European Union. Analysts are saying that the Asian currencies recently enjoying a rally might be overvalued at the moment, due to the fact that the global economy probably won’t grow much. Instead of depreciating, or remaining at a stable levels, the currencies witnessed short-term gains.

Apart from the European issue, a lot of importers in the Asian region are trying to benefit from strong domestic currencies by holding U.S. dollars. This increases demand for the U.S. currency, eventually making the domestic currencies depreciate back to a stable level.

The main currencies weakening against the U.S. dollar were those of  South Korea, Thailand and Taiwan. Both the won and the bath depreciated 30 basis points, while the Taiwan dollar managed to decrease 20 basis points.

Turkish lira almost up 7 percent against U.S. dollar

The Turkish lira has been gaining against the U.S. dollar and other currencies this month. Some economists expected the Turkish Central Bank to intervene in the market, in order to make sure that the country’s currency doesn’t get overvalued. However, these predictions proved to be wrong as the Central Bank meeting in turkey did not lead to an intervention. As a result, demand for the Turkish lira increased, making it gain against the U.S. dollar and reach a 12-week high.

The lira had a very poor year in 2012, which means that the currency has lost a lot despite these gains made in 2012. On account of that, Turkish officials stated that they have no interest in devaluing their currency, since it does not affect demand for Turkish goods and services at the moment.

The total gain for the Turkish currency is just under 7 percent in January 2012, making today’s gain against the U.S. dollar a full percent. The lira is now one of the top performing currencies against the U.S. dollar in 2012, it will be interesting to see how the currency does the remaining 11 months of the year.

British pound depreciates

The British pound lost ground in the forex market today on weak domestic news. The economic outlook in the U.K. is looking a bit shaky after fresh reports have been made public.

Expectations are that total profits for the country’s companies will decrease, which in turn might force the British Central Bank to increase spending and buy toxic assets from banks. This is a measure usually taken to ensure that banks keep lending money to people and that borrowing costs do not increase.

The British pound depreciated 0.6 percent against the euro, 0.2 percent against the Japanese yen and remained stable against the U.S. dollar.

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Australian dollar declines

The Australian dollar depreciated in the forex market today on unanticipated government reports published by the country’s statistical agency. Employment in December shrank, which was not expected by economists or analysts. This brought an end to the three-day appreciation of the Australian currency, which has gained mostly against the U.S. dollar.

The Australian dollar weakened against 15 other currencies, apart from the U.S. dollar. Analysts are predicting that the country will be pressed to stimulate growth, meaning that the Reserve Bank of Australia might be forced to cut interest rates at the next summit.

The Australian dollar lost 50 basis points against the U.S. dollar and 60 basis points against the Japanese yen.

Brazilian real gains on Chinese and European news

The Brazilian real gained against the U.S. dollar and several other currencies in the forex market today. The real reached a 60-day high against the U.S. currency, as speculations are that the Chinese are about ease restraints on the country’s monetary policies, creating room for more growth. China is one of Brazil’s most important business partners and the Brazilians will most likely benefit from such actions.

Apart from rumors about policies in China, Europe is looking like it is strong and ready for a comeback, which was demonstrated in the appreciation of the euro in today’s trading session. These two news combined made both global stocks and currencies denoted as risky appreciate.

The Brazilian real appreciated 80 basis points against the U.S. dollar and the country’s yields increased 0.05 percent.

Euro starts of strong but weakens by the end of the trading week

The euro has been experiencing many weeks of losses in the forex market. This week, things were brightening up for the European currency. During the start of the trading news there were several positive signals coming from the European region. Germany’s Merkel and France’s Sarkozy announced that they had very effective meetings and that the new fiscal policies for the European Union might be made official 4 weeks before earlier estimates. The European Central Bank reported that they will keep lending money to banks at record low interest rates and Germany announced that they are willing to add more funds to the International Monetary Fund if other countries are prepared to do the same.

Overall, all these signals simultaneously created optimism for a recovery of the European region, which made the euro appreciate against several currencies, including the U.S. dollar and Japanese yen. During yesterday’s trading session in New York, all these gains were erased when the rating agency Standard & Poor’s announced that they will downgrade several European economies. Countries who suffered a lower credit rating were France, Austria, Greece, Italy, Spain and several others.

The euro ended the trading sessions with a 30 basis points depreciation against both the U.S. dollar and Japanese yen.

Indian rupee headed for a successful year in the forex market

Analysts are predicting that India will be witnessing large inflows of capital as the country is handling its inflation problems and the huge 2011 depreciation of their currency, reaching a loss of about 15 percent against the U.S. dollar. The reports made the Indian rupee rise in the forex market. According to some of the larger financial institutions, the Indian currency will appreciate somewhere between 4 and 5 percent against the U.S. dollar in the coming 12 months. The Indian government also reported that prices for food decreased in the country, which proves that the inflation problem might be disappearing.

The predictions for the rupee gave the currency a boost and increased rupee held assets by around 6 percent, which is roughly 1 and a half billion U.S. dollars. Indian bonds are currently offering yields around four times higher than U.S. treasuries. Analysts are saying that rupee will appreciate due to lower inflation, but also because both investors and Indian citizens living outside the country will invest in the country to enjoy a high interest rate.

Previously, the Indian Central Bank was forced to focus on the troubling inflation level and strive to keep it low. As that situation is being resolved, the Indian government can focus on stimulating economic growth in the country.

Stock markets and several currencies gain in early 2012

The U.S. economy has been showing great strength in a year full of financial turmoil and distress. The country continues to deliver positive reports, which creates a positive impact on financial markets. Several European and Asian stocks appreciated over a percentage today as a result of recent reports.

Europe’s main stock index grew by 70 basis points and Asia’s pacific index appreciated 130 basis points. However, Japanese numbers are not included as the country’s financial markets are closed due to a holiday. Meanwhile, China reported that purchases in the manufacturing sector rose by 2.7 percent, which was a lot more than markets had expected.

As a result of upswings in both stock markets and the forex market, the U.S. dollar has depreciated around half a percentage the last week. When the global economy looks strong and stock markets appreciate, investors tend to move away from the safety of the U.S. dollar to other assets offering higher yields and higher levels of risk.

Turkish lira gains in the forex market

The Turkish lira appreciated in the forex market today as the Turkish government started to sell U.S. dollars from its currency reserves. As a result, the lira hit its highest peak in 14 days.

The Turkish currency had a very rough year in 2011, depreciating over 18 percent against the U.S. dollar, which made it one of the absolute worst performing currencies last year. However, the New Year seems to be starting of with positive news and an appreciating currency for the Turks. The Turkish lira appreciated half a percentage against the U.S. dollar today alone.

The action taken by the Turkish Central Bank is deliberately aimed to affect the negative price development of the Turkish lira. Analysts are predicting that Turkey have sold up to half a billion U.S. dollars.

Euro outlook still negative

The euro recently hit a record low as it was traded under 1.30 against the U.S. dollar. Investors, analysts and economists believe that the currency is set for further falls as the European debt crisis still have the markets worried and the general feeling is that European officials are not taking proper action.

Recent reports have shown that a lot of investors and funds are hedging their bets by taking out insurances on the euro, thus protecting their investments if the currency plummets. The euro-zone area are to present an action plan within 30 days, but the increased level of skepticism is clearly reflected in recent drops and the increased number of bought insurances.

Despite all the pessimism surrounding the euro, many people believe that it still trading on levels much higher than it deserves to. The current situation is the worst the currency has faced to date since its launch 12 years ago, however, it still traded a lot higher than its average.