Weekly Currency Roundup
International FX Market
The international markets went through a massive change this week. Markets were gripped with fear about a possible US credit rating downgrade. This fear came true when Standard and Poor's downgraded US. As credit rating from AAA to AA+. The dollar was seen to fall rapidly amongst a basket of currencies. On Tuesday, however, the dollar briefly spiked against the yen as large stop loss orders were triggered in other cross currencies prompting the dollar towards an intraday high and fuelling speculation that Tokyo authorities had stepped into the market, but the dollar's subsequent decline eased market jitters. Although the dollar had some height over the Australian dollar on Wednesday, its growth was still limited due to US Federal Reserve's promise to keep rates near zero for two years.
Euro rose on Monday after the European Central Bank announced steps to ease tensions in the euro zone debt market, while the Group of Seven major industrial nations reaffirmed their vow to support financial market stability and growth. The rise of the euro was short lived as on Tuesday, the Swiss franc surged to an all-time high against the euro on Tuesday as investors' confidence was shattered by extended falls in share prices, prompting them to flock to safe haven currencies. Thursday saw the euro rise from lows against major currencies in Asia on Thursday but was seen vulnerable to renewed selling pressure as worries about the euro zone sovereign debt crisis spread to the region's banking sector.
Local FX Market
Interbank USD/BDT rates remained steady this week with slight changes in trading volumes due to fluctuations in demand and supply. On Thursday market trended slightly
lower on improved liquidity scenario.
Commodity Market
Crude oil plunged to a six-month trough during the middle of the week after a US credit downgrade intensified fears about a global slowdown in demand for energy, sending commodities markets tumbling. There was some recovery on Wednesday due to the US Federal Reserve promise to extend near-zero interest rates for two more years but once again on Thursday, oil fell as investors fled to safe haven assets following another sharp sell-off on Wall Street, sparked by fears that Europe's debt crisis could spread to France. Gold surged to a record high on Monday as investors went for safer assets after the United States lost its top-notch AAA credit rating and held steady during the week hovering near a lifetime high struck in the previous session. Further rise in gold is expected due to the Federal Reserve promise to extend near zero interest rates.
Comments