US Dollar, Euro, British Pound, Indian Rupee, Pakistani Rupee and Chinese Renminbi compared with other currencies

Currency Trends in Emerging Countries: 2017 Monthly Report

A series of low-cost currencies have clearly declined against the US dollar in 2017, therefore plunging vs the rebounding euro and Sterling. By contrast, the Indian rupee and the Chinese renminbi have been boosted by strong economic growth and the return of capital flows to the emerging markets. Our monthly statistical report covers the past two years and displays a comprehensive view of currency values against the US dollar but also v. the euro, the British pound, the Indian and Pak rupees, and the Chinese renminbi over a 2-year period.

The dollar has remained weak in December against most traded other currencies, whatever the approbation of massive tax cuts by the US Congress and the relatively strong economic growth in the country.

Tax cuts may possibly boost business activities but the markets could be disappointed whereas the fiscal deficit will dramatically expand.

Although the interest rates have been further raised by the US Fed in December, and will continue to slowly climb in 2018, the American currency could continue weakening.

The euro has jumped by contrast in December, now reaching 1.2 $. The European currency has eventually surged 13.8% in 2017, if considering its relatively high value on January 1st, 2018.

Such a rebound of the euro should boost demand for clothing from other countries, especially in low-cost countries.

Whatever the overall weakness of the US dollar, most currencies of apparel producing countries have dropped against the USD in 2017.

Falling South Asian currencies

The Bangladeshi taka has for instance lost 6.4% vs the dollar, resulting in a fall of 17.8% against the euro, which should boost sales to the Eurozone.

The same taka has also fallen 14.3% against the Sterling in the past year, meaning an expected rebound in shipments to the UK which had been heavily depressed by the Brexit vote and the following decline of the pound.

The British currency has eventually risen 9.3% in the last year vs the USD but is still 9% below its level two years ago.

In addition to the taka, the Sri Lankan rupee has also plunged in 2017 (-4.1% vs the dollar, -15.8% vs the euro, -12.3% vs the Sterling).

Also in South Asia, the Pakistani rupee has suddenly slid at the end of the year, losing 5.2% against the dollar in December, and eventually falling 6.5% over the full year.

The PKR has even plunged by 17.9% vs the euro (-14.5% vs the pound).

Rising INR and RMB

With financial flows now returning back to emerging markets, the Indian rupee has risen 6.4% against the dollar in 2017, by contrast.

The Chinese renminbi has also gained 6.7%, reflecting a rebound in the second part of the year, as investors were impressed by the resilience of the second largest economy.

The dollar could continue weaken in 2018, due to less exciting results of the Trump policy than earlier expected amid ballooning deficits.

By contrast, the euro may be boosted by a stronger economic growth in the eurozone, and a more restrictive monetary policy.

In London, the central bank may have to raise interest rates in order to curb a looming inflation, which could support the value of the Sterling, whatever the disastrous consequences of the Brexit.

Download our comprehensive table (csv file)


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