Posted August 18, 2009
The Mexican peso strengthened as signs the US economy is beginning recovery in certain sectors are reported. The Brazil real and Canadian dollar also rose as oil prices increased. The Japanese yen increased against the US dollar.
Mexico’s peso led the way among strengthening currencies when it rose .7 percent yesterday reaching 12.9249 pesos per US dollar. This increase followed a Monday slide of 1.3 percent which is the largest single day decline the peso has experienced since 11-May-2009.
The Mexican economy is closely tied the US economy with 80 percent of Mexican exports destined for the US. Any signs the US recession is ending directly benefits the peso. The reports net US housing starts in July increased benefitted the peso. Mexico has had a particularly difficult time during the last 6 months due to the impact of both the recession and the swine flu on its economy.
Global stock increases also led to a strengthening real of Brazil’s currency. The Brazil real increased more yesterday than it has in the last two weeks. Another positive for the real was the increase in the German investor confidence index.
The real rose to 1.8443 real per US dollar which equates to a 25 percent increase for the year. This currency is one of the best performing emerging market currencies and that is expected to continue with increases in oil prices and strengthening in the economies of Brazil’s trade partners.
Also increasing yesterday was the Canadian dollar which is the first increase it has seen in 3 days when paired with the US dollar. The loonie rose by .3 percent to C$1.1018 which means one Canadian dollar will buy 90.76 US cents.
The appreciation of the Canadian dollar is attributed to the increase in oil prices for September delivery. Prices for a barrel of crude oil for September delivery increased to $69.45 on the New York Mercantile Exchange.
The Columbian peso fell to 2,037.38 pesos per US dollar. This is biggest drop the peso has seen in a week.
The Chile peso, on the other hand, increased to 555.0 pesos per US dollar. The Chilean current account rose during the second quarter of 2009 to $1.13 billion which is higher than expected.
Venezuela’s bolivar also increased against the US dollar to 6.75 bolivars per greenback. The Peruvian sol fell to 2.9597 sols per US dollar.
The Japanese yen rose against the US dollar and most other major global currencies including the euro. The yen increased to 133.80 yen per euro and to 94.65 yen per dollar.
The UK pound rose against the US dollar to $1.6551 and against the yen to 156.78 yen. The UK consumer prices for July were unchanged which was a better result than was forecast by economists. The UK is experiencing the mixed economic reports similar to what is happening in the US. The mixture of good and bad economic indicators is keeping an element of volatility in the markets.
The Hungarian forint rose for the first time in the last three days. The forint rose on the news of the increase in the German investor confidence index. The forint strengthened to 272.65 forints per US dollar.
Also rising was the Polish zloty and the Czech koruna. The zloty increased to 4.1711 zloty per US dollar and the koruna rose to 25.620 koruna per US dollar.
Economists are predicting the US dollar will weaken further by the end of 2009.