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

April 1, 2024 (see April 17 update below). Next update: May 1, 2024. Visit Search to look at past issues of World Currency Observer (brochure edition).

A significant number of countries lowered their own interest rates in March 2024 against a backdrop of strength in their own currency. One such country was Mexico, where a quarter percentage point drop in its interest rates occurred as the Mexico peso strengthened steadily on the month, up by nearly 3% against the US$ in March, and up by 11% since this time last year. The Canada dollar is up by 1.5% against the USS since this time last year. The Costa Rica colon was up by 2% in March 2024 against the US$ (up 7% since this time last year) and the Jamaica dollar was up 1.5% in March. The Colombia peso was up by 2.25% against the US$ in March 2024, and the Uruguay peso was up by 4.5%. The Swiss franc fell by 2% against the US$ in March 2024 and also against the Euro. There was no net movement of the Euro against the US$ in March and the Euro is down slightly against the US$ since this time last year. The Sweden krona fell by 3% against the US$ in March 2024. The Albania lek rose by 3.5% against the US$ in March 2024, reversing its fall in February, and is up by 11% since this time last year. The Turkey lira rose sharply after a 5% increase in interest rates on March 21 (the main policy interest rate is now at 50%), and the lira then moved back down a little in the last part of March, with a net weakness of 3.5% against the US$. The Armenia dram rose by nearly 2% against the US$ in March, and is down by 4% against the US$ since this time last year. The Georgia lari was down by nearly 2% in March against the US$, and down by 4.5% since this time last year. The Egypt pound was floated in March 2024 (see the March 2024 WCO). The Israel shekel was down by nearly 2% against the US$ in March. The Ghana cedi fell by 4.75% in March against the US$, and is down by 3% since this time last year. The Kenya shilling was up strongly in March - adding to the upward movement in February 2024 against the US$, the cedi was up by 20% over the two months (there are some views that the shilling is now overvalued). The South Africa rand reversed some of its February decline, with a 1.5% upward movement against the US$ in March (down 7% since this time last year). The Madagascar franc was up by 3% against the US$ in March, and the Seychelles rupee was down by 2%, with roughly the same percentage movement against the US$ since this time last year by the rupee. There was a net weakening of 1% of the Japan yen against the US$, with the yen gaining strength until the middle of March against the US$, then declining, and shortly after that there was the announcement of the upward movement of Japan interest rates (the end of negative short-term interest rates in Japan and of the upper cap on long-term interest rates), and the yen was steady - the yen is down 14% since this time last year. The South Korea won showed a similar up-down movement in March, finishing March 2024 with a 1% decline of the won against the US$ over the month, and a 3.5% decline since this time a year ago. The Afghanistan afghani strengthened by 3% against the US$ in March 2024, and is nearly 20% stronger against the US$ since this time last year. The Sri Lanka rupee moved up again in March 2024, for the fifth month in a row and, at 300/1$US, is up by 10% from its value at the beginning of November 2023. There was another very sharp increase in cocoa US$ prices in March 2024, which are now up nearly 250% since this time last year – there are many references to “a doubling of chocolate prices” in the world press. North American natural gas prices continued to ease in March 2024, down 35% since this month last year. Gold and silver prices in US$ rose by 8% in March 2024. Oil prices in US$ were up by 4%% in March 2024, and are up by 10% since this time last year.

 Japan yen March 2024.png

In Senegal, a part of the election platform of the just-elected new government called for movement to a new national currency for Senegal, on the grounds that the existing CFA franc arrangement hampers economic growth and development. Looking at the statements reported by the media during the election campaign, WCO has the impression that the choice for any first movement on this issue by Senegal would be to search for agreement among the eight nations of the West African Monetary Union which use the CFA franc or, more generally, among all CFA franc countries, and that the general preference would be to have a joint movement to a new currency. Besides Senegal, other countries in the WAMU are Benin, Burkina Faso, Côte-d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

April 17, 2024 update

After rising sharply in many countries in the last two years, interest rates in virtually all countries around the world are either at what is expected to be their peaks, or have just fallen from their peaks (declines to this point in April 2024 include Argentina, Chile and Peru). Among the more advanced countries, matching 1:1 interest rate increases across countries had largely neutral capital flow impacts on exchange rates (the quality of financial instruments are, mostly, largely the same among these countries). But another impact of interest rate increases, and the forthcoming decreases, depends upon the structure of indebtedness within countries: short-term debtors are vulnerable to cash-flow impacts from interest rate changes (and these feed through to affect exchange rates). With that in mind, WCO studied the chart “Vast differences” in a recent IMF blog (reference below), and the chart indicates to WCO that there were significant differences among countries in their fixed rate housing debt as a proportion of all their housing debt at the moment when interest rates touched their end-of 2022 peak after sharply rising in the previous nine months of 2022 –in particular, the chart suggests that the United States had among the world’s highest proportion of fixed rate housing debt, necessitating large United States interest rate increases to achieve an inflation reduction through expenditures, and these increases have also had a positive impact of the value of the US dollar. Countries which tried to match United States interest rate increases, with an eye on the value of their currencies, generally felt more strongly the impact on housing mortgage interest payments (the one exception suggested by the chart: Mexico). Beyond comparisons between the United States and the rest of the world, the “Vast differences” chart also suggests to WCO there are other very significant regional differences, such as: Australia versus New Zealand (New Zealand had lower fixed rate housing debt than Australia); USA/Mexico versus Canada (lower); Germany versus Denmark (lower); United Kingdom versus Ireland (lower). The differences should be less now than at the end of 2022, as borrowers favor shorter term debt when rates are high are expected to fall. Countries with lower proportions of fixed rate debt will favor a fall in interest rates to get their economies moving, and, at the same times, must be prepared to accept weakness in their currencies. (Reference: IMF Blog-Housing is One Reason Not All Countries Feel Same Pinch of Higher Interest Rates, April 8 2024.)

(World Currency Observer will next be updated on May 1, 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.)