Ringgit Rises to New Monthly High

The Malaysian ringgit reached its monthly high today on the traders’ speculations that the demand for the emerging markets’ assets will increase as the recession eases.

The emerging stock markets in the Asian region continue to rise and such currencies as the Malaysia’s ringgit and the Korea’s won are posting one of the longest gaining streak in their recent history. The stimuli from and for the world’s leading economies — U.S., Europe and China boost the demand for export and positively influence the attractiveness of risk-associated assets.

There is also a great positive signal from the optimistic expectations for the Group of 20 meeting, which will be held in London on April 2. The analysts expect the Asian currencies to continue their growth next week. Traders will remain in a bullish trend on everything that has been oversold at least until the G20 meeting is over.

USD/MYR declined from 3.6245 to 3.6165 as of 7:18 GMT today. It reached 3.6135 earlier today — it’s lowest level since February 16.

Fed Move Slams USD

The dollar collapsed following the FOMC monetary policy decision in the Wednesday afternoon session. Although the Fed left its benchmark interest rate unchanged at 0%-0.25%, it announced additional measures to prop up the economy and loosen credit to the markets. The statement announced, “To provide greater support to mortgage lending and housing markets, the Committee decided to increase the size of the Fed’s Balance sheet further by purchasing up to an additional $750 billion of agency MBS, totaling $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion”. The Fed also announced the purchase of up to $300 billion of longer-term Treasuries in the next six months.

The surprise move by the Fed was lauded by the US equity markets, sending the Dow Jones higher by over 1.5% and the S&P 500 sharply up by over 2.4%. However, the greenback sold off heavily – tumbling to a fresh two-month low against the euro at 1.3436.

GBP Recovers from Jobs

The pound was initially lower versus the dollar and euro, slipping to 1.3847 and 0.9414, respectively. Dragging the sterling sharply lower was a dismal report on the UK jobs data. The January ILO unemployment rate edged up in line with expectations to 6.5%, versus 6.3% in the previous month. The February claimant count spiked up by 138.4k, bringing jobless claims to 1.39 million – which marked its highest level in 38-years.

Cable continues to teeter just beneath the 1.40-level, with interim support starting at 1.3930, followed by 1.39 and 1.3870. Additional floors will emerge at 1.3860, backed by 1.3840 and 1.38. On the topside, resistance is seen at 1.40, followed by 1.4040 and 1.4070. Subsequent ceilings are eyed at 1.41, followed by 1.4150 and 1.42.

Pound Declines before Employment Report

The Great Britain pound declined against the other major currencies today on speculations that the employment report that is scheduled for the release today will show that the situation with labor market is worsening.

Despite the continued gains on the global stock markets and the elevated interest for the high-yielding assets, the pound sterling fell for the first day in five against the Japanese yen and continued its yesterday’s moderate decline against the U.S. dollar and the euro. The market participants expect an increased number of the jobless claims in U.K. from the report that’s released today at 9:30 GMT.

Bank of England Governor Mervyn King said during its late yesterday speech in London that the positive outlook for the consumer price growth may turn the monetary policy back to the bullish trend in the interest rate. Analysts saw this statement as a positive signal for the pound but it looks like the markets aren’t sure about the positive CPI numbers appearing on the horizon soon.

GBP/USD fell from 1.4055 to 1.3966 as of 7:49 GMT today. GBP/JPY went down from 138.73 to 137.66, while EUR/GBP rose from 0.9271 to 0.9305 today.

Indian Rupee Approaches Recent Record-Low

The Indian rupee declined against the U.S. dollar today, almost reaching a new record-low level, as the domestic companies converted to dollars in order to pay for the imported goods.

Although, the risk-aversion level is quite moderate in the global markets today, the rupee falls as the Indian economy faces much greater risks among the other emerging countries. The drop in the dollar-denominated exports spurs the growth of the internal demand for dollars over their supply. The falling Indian stocks are also pressing hard on the national currency.

The analysts see the main reason for the rupee’s weakness in the internal demand for the foreign currency. The next problem they point out is the net sale of the Indian equities by the foreign funds, which totaled $1.8 billion this year. As long as this fundamental trend persists the INR won’t be able to offer a consistently growing trend against the U.S. dollar.

USD/INR rose from 51.52 to 51.83 as of 9:16 GMT today after reaching as high as 52.10 during the early Asian trading session. The record-high rate of 52.19 was set by this currency pair on March 3.

USD Falls as Financial Turmoil in U.S. Worsens

The U.S. dollar declined today against the other major currencies, after showing a good performance yesterday, as the investors expect that the labor market reports, that are to be released today, will signal a further worsening of the recession in the United States.

The Japanese yen is the only major currency that is rising against the greenback for the second day today. It started to react yesterday after Moody’s rating agency said that it may revise the credit ratings of the three U.S. largest banks. But the greatest pressure on the dollar is provided by the expectations for the nonfarm payrolls to fall by the most since 1949 this February.

More than that, if the nonfarm payrolls report will show the worse than expected decline, the dollar selling may turn into a real rally and continue through the next week. On the other hand, analysts say that if the report comes out not so bad, the today’s decline may get snapped by the dollar soon.

EUR/USD rose from 1.2540 to 1.2698 as of 8:25 GMT today. GBP/USD went up from 1.4121 to 1.4272, while USD/JPY declined from 98.03 to 97.31 today.

Pound Falls on HSBC’s Bad Loans

The British pound fell against all major currencies today on the concerns that the United Kingdom’s largest bank will have a disastrous time handling the bad loans of its United States unit.

The U. K. currency declined against the dollar and the euro as both the U.K. FTSE 100 benchmark index and the Japanese Nikkei 225 dropped during the late Asian and early European stock market sessions. The additional government help to the banking system will be needed to keep the financial system afloat in the United Kingdom. HSBC, the Britain’s largest bank, declined by 18 percent today.

The currency analysts link the pound’s weakness directly to the country’s banks and the general stock market indexes. The British government has always been eager to give out the money to their banks and this giveaway policy can’t go without increasing the monetary base, which leads to the currency depreciation.

GBP/USD fell from 1.4126 to 1.3883 as of 11:00 GMT today. EUR/GBP rose from 0.8970 to 0.9065, while GBP/JPY declined from 138.78 to 137.29 today.

Korean Won Rises as Asian Stocks Gain

The South Korean won rose for the third day against the U.S. dollar today as some Asian stock markets showed the growth and the high-yielding currencies were favored by the traders.

The majority of the most-traded Asian currencies (except the Japanese yen) showed gains today that can be simply regarded as the correctional movement after one of the worst beginnings of the year. The Korean KOSPI composite index advanced by almost 2 percent today as the investors thought that it was largely oversold recently.

Some analysts go as far as stating that the current month will be the final really bad one for the emerging markets and beginning from April the things will be gradually improving for them. The South Korean won trading near 1,500 per dollar looks very promising if you consider a global recovery soon. The currency was just a good buy, which was supported by the growing stocks today.

Until today there were speculations that the Korean foreign exchange reserves aren’t liquid enough to supply the U.S. dollars whenever the demand arises. The Bank of Korea informed the market participants today that the reserves can be turned into cash anytime to satisfy the demand for dollars if required. More than that, the last currency auction was skipped due the diminishing demand for the greenback.

USD/KRW fell from 1537.5 to 1510.6 as of 6:00 GMT today. It was reaching as high as 1559.0 yesterday.