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

September 2, 2024. Next update: September 18, 2024. Visit Search to look at past issues of World Currency Observer (brochure edition).

August 2024 was another month in which many currencies around the world moved up against the US$. Among these, however, the Mexico peso down was down 6% in August 2024 against the US$ after a 2% decline in July 2024, and down by 15% since this time last year - there is a growing negative perception about the Mexico petroleum industry. The Canada dollar was up by 2.5% in August against the US$. The Costa Rica colón was up by 1.5% against the US$ in August, and up by 4% since this time last year. The Chile peso was up by nearly 4% against the US$ in August 2024, and is down by 7.5% against the US$ since this time last year. The Brazil peso is down by 14.5% since this time last year against the US$. European currencies were generally up against the US$ in August - among these, the Euro was up 2% in August against the US$, and the Swiss franc was up by 3.5% since this time last year. The Sweden krona was up 4% in August against the US$ (after a 2% decline in July). The Turkey lira was down by 3% in August against he US$, and by 28% since this time last year. The US$ value of the Russia rouble was down by 5.5% in August - after this weakening, it is still up by 5% since this time last year. The Iran riyal fell by 2.5% against the US$ in August 2024, and is down by 21% since this time last year. The Israel shekel was up by 2% against the US$ in August, and up nearly 3% since this time last year. Upward movement of Africa currencies in August against the US$ was generally, more or less, in line with the 2% increase in the US$ value of the two CFA francs (which are pegged to the Euro) - exceptions included the 3.5% decline in the US$ value of the Angola kwacha, the 80% fall in the South Sudan pound, and the movement of the Ethiopia birr to a free market (see below). Among the long list of currencies in the Pacific Rim that strengthened against the US$ in August 2024 was the Japan yen, which was up by 3%, an upward movement which reversed several months of decline, and which left the yen up by nearly 1% since this time last year. Among the other currencies for which a similar narrative can be told is the China yuan (up by nearly 2% in August) and the Australia dollar (up by 3.5% on the month against the U$, and up by 4% since this time last year). The Indonesia rupiah was up by 5% in August 2024 against the US$, which left it down by 1.25% since this time last year. Among South Asia currencies, the India rupee was steady against the US$ in August. The Myanmar kyat was down by 18.5% in Augusts, and down by nearly 100% since this time last year. The list of South Asia currencies which strengthened significantly in August included the Malaysia ringgit (up by 6% in August against the US$ after a 2% rise in July 2024) and the Thailand baht (up by 4.5% against the US$ in August after a 3% rise in July. Commodity prices (US$ values) were generally up around the world in August 2024, in many case reversing July 2024 price reductions. Among the exceptions were petroleum prices, down 5% in August - oil prices are around 10% lower than they were at this time last year. Wheat prices were another exception, down 3.5% in August, and down 8% (in US$) since this time last year. Gold prices are nearly 30% higher than they were at this time last year.

Ethiopia (population 120 million) moved, on July 29, 2024, from a ‘managed floating’ exchange rate regime (which was alongside a substantial parallel foreign exchange market) to a floating exchange rate regime. There was an immediate drop of around 75% in the “headline” foreign exchange rate - from a managed floating rate of 57.4/$1US in July to a 101.2/$1US market exchange rate (which averages the foreign exchange sell rates at commercial banks, and is known as the Indicative Daily Exchange Rate or IDER). In the month since the transition to the new regime, the birr has moved down a further 15.5%, to around 117/$1US. Also announced were a dozen other foreign exchange changes, with much focus on a reduction, to 50%, of the proportion of foreign currency export proceeds which are required to be converted into Ethiopian birrs, and also on the fact that conversion is to be made at the new market exchange rate. The extent of the announced changes are acknowledged to be ambitious – Ethiopia is a a landlocked country, whose continuing challenges include: continuing the ocean access necessary for export products such as coffee and gold, and imports of food and refined petroleum (principally through the port country of Djibouti, but also Somaliland); and civil unrest, which has given rise to military action. Among the circumstances giving rise to the change in the foreign exchange regime was an act of default in December 2023, and there have been negotiations with lenders since then (one important creditor: China), with the announcement of other measures, which include the opening of more sectors in Ethiopia to foreign investment. A key part of the exchange rate reform process is substantial financial support from the International Monetary Fund and the World Bank, which was announced at the same time as the implementation of the foreign exchange reforms. One reason for the significance of the foreign exchange reforms by Ethiopia is that there is a view that they may be reflected by other countries in Africa, due to what is perceived as an increasing need to deal with historically high debt levels, due to a number of factors, including high food prices and interest rates, all among countries whose economies still have not fully recovered from the effects of Covid-19 pandemic.

(World Currency Observer will next be updated on September 18, 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.)