Headline for .     Since the beginning of 2018, despite the Covid-19 pandemic, currencies around the world are generally down against the United States dollar.     
World Currency Observer
World Currency Observer

Exchange Rates: one year high and low

July 2, 2024 (see July 17 update below). (Next update: August 2, 2024). Visit Search to look at past issues of World Currency Observer (brochure edition).

There were more declines in interest rates around the world in June, among them a 0.25% drop in Eurozone short-term interest rates on June 6. The Mexico peso fell by 7.5% in June, which some are linking to the result of the Mexico presidential elections, which were held on June 2 - the peso is down by 6.5% since this time last year. The Iceland krona fell by 1.25% in June 2024, reversing part of its 2.5% May upward movement against the US$. The Suriname guilder continued to strengthen against the U$ - up an additional 6% in June 2024 after a 6% rise in May, and up by nearly 21% since this time last year. Among other South America currencies: the Chile peso was down by nearly 2.75% in June after a 2.5% increase in May against the US$; the Brazil real was down by 6% against the US$ in June, and is down by 15.5% since this time last year; and the Colombia peso was down by nearly 6.25% against the US$ in June. European currencies were down against the US$ in June, including the Euro, which was down by 1% against the US$ in June 2024, and is down by nearly 1.5% since this time last year. Among other Europe currencies, the Hungary forint was down by 3% against the US$ in June 2024 and down by nearly 10% since this time last year. The Türkiye lira was down by nearly 2% against the US$ in July - while the lira is 26% lower than its value a year ago, it has been, compared to the last few years, relatively stable since March 2024, the month when the key Türkiye short-term policy rate was raised by 5% to 50% (Türkiye year-over-year inflation is at roughly 75%). The Russia rouble was up by 4.5% against the US$ in June 2024, and is down by 1% since this time last year. The Belarus rouble was down by 2% in June against the US$, and down by nearly 8.5% since this time last year. The Egypt pound fell by 1.5% in June against the US$ after a similar fall in May 2024. The Israel shekel fell by around 1.5% in May, reversing its 1.25% May increase against the US$ - the shekel is around 3% stronger than it was before the low it reached before the invasion of October 2023. The Nigeria naira was down by 6% against the US$ in June 2024, and the Ghana cedi was down by 3.5% (down by 37% from this time last year). The Mauritania ouguiya was up by 1% against the US$ in June, and down by 14.5% from its value at this time last year. The Zambia kwacha rose by 4.5% against the US$ in June, and is down by 50% since this time last year. The South Africa rand was up by 3% in June, but behind this sizeable net movement on the month was an even larger up and then down movement. At the end of June 2024, the value of the Zimbabwe ZiG dollar is 13.70/1$US – the value of the outgoing ZWL Zim$ at the beginning of April 2024, when the ZiG was introduced, was around 21000//$1US (see below). The Uganda shilling was up by 3% in June against the US$, leaving it at around the same value that it was a year ago. The Japan yen was down by 2.5% against the US$ in June 2024, and is down 11.5% from its value at this time last year. The Laos kip was down by nearly 3% in June against the US$, and down by 16.5% since this time last year. A large number of commodities showed declines in their US$ prices in June 2024, ranging across metals, (tropical and temperate climate) food commodities and cotton, while there were price rises in June among many energy commodities, including coal, oil and North America natural gas.

 South Africa rand June 2024.png

Developments over the last three months suggest that, after many years characterized by bouts of hyperinflation followed by successive currency “reforms”, Zimbabwe may have found a path which could lead to true currency stability, with the launch of a new “hard” currency, the ZiG gold Zimbabwe dollar. Among developments in support of this view: the Zimbabwe international currency code, it was just announced, has been changed to ZWG, which is the ZiG dollar. The new ZWG (ZiG) Zimbabwe dollar is generally described as a structured currency, whose value is tied to Zimbabwe central bank reserve holdings of hard foreign currencies, and of precious metals, such as gold, silver and diamonds. The ZiG dollar was launched on April 8 2024, in the context of a new Zimbabwe monetary policy framework, after a depreciation of the market value of the ZWL Zimbabwe dollar of (perhaps) 300% in the first three months of 2024– private holdings of Zimbabwe bank deposits have already been converted to ZiG dollars, and the ZWL Zimbabwe dollar will be abandoned at the end of August 2024. In a statement issued by the central bank, it was indicated that “ the [conversion] rate will be guided by the closing interbank exchange rate and the price of gold as at 5 April 2024 ”The new currency is circulating in Zimbabwe along side the other foreign currencies recognized as legal tender in Zimbabwe. It was also announced that, as part of the new monetary policy regime accompanying the new currency, the main policy interest rate of the central bank of Zimbabwe was lowered from 130% to 20%.

July 17, 2024 update

Seven European Union members have retained their historic currencies instead of replacing them with the Euro (Bulgaria lek, Czechia koruna, Denmark krone, Hungary forint, Poland zloty, Romania leu, Sweden krona), and the European Commission issues its Convergence Report every two years – the latest on June 26, 2024 - which is an assessment of whether six of them (not Denmark, which has an exemption, based on the twenty-five year fixed relationship of the krone to the Euro) would meet the financial governance and economic tests necessary to qualify for becoming Euro members. The test for immediate acceptance is membership for the two previous years in ERM II (that is to say, loosely, an exchange rate with a value tightly tied to the Euro - Bulgaria and Denmark are in compliance), but the bi-annual assessment focuses on other factors which are considered just as important: compatibility of national legislation with EU banking and other laws; and whether inflation, budgetary deficits and interest rates are approximately the same as European Union averages or benchmarks. Interestingly, Bulgaria passed the fixed-against the Euro test with no problem. but (as would have been true for other countries around the world), “failed” the overall convergence test because its deemed inflation rate of 5.1% over the last year is too high in comparison with the benchmark Euro inflation rate (the 4.1% Euro inflation benchmark is set at a margin above a measurement of actual Euro zone inflation rate, a measurement which is defined in what is described as a “non-mechanical manner”, due to factors which include substantial differences in the ways that individual countries measure inflation). A former member of the non-Euro group, prior to Brexit, was the United Kingdom. An interesting question is always whether existing members of the Euro zone would qualify for acceptance if they were currently outside the zone, and the countries that from time to time that would “fail” would generally do so because they are outside the deficit as 3% of GDP rule (but an additional factor over the last two years has been inflationary pressures linked to supply chain and energy price disruptions attributed to the February 2022 Russia “special military operation” in Ukraine, including the financial and trade sanctions responses.)

 Poland zloty Romania leu Hungary forint per Euro May 2024.png

(World Currency Observer will next be updated on August 2, 2024. Visit Search to look at past issues of World Currency Observer (brochure edition). For permission-to-quote enquiries, e-mail World Currency Observer at WCO@briargreen.com.)