Pacific Exchange Rates Report for February 5 – 9
By: Khadija Farooqi, The Quinnipiac University Economics Research Team
Pacific Currencies Index
Source: Yahoo Finance and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency) and then indexed to be 100 at the start of the period.
Throughout the week of February 5th to February 9th, the currencies seemed to mimic each other’s behavior and move in the same direction, something we haven’t seen in a few weeks. The most volatile of the group, the South Korean won (red), initially exhibited a 0.8% increase but smoothed out with a 0.3% decrease by the end of the week. Meanwhile, the Australian dollar (green), New Zealand dollar (blue), and Japanese yen (maroon) all experienced a steep drop of about 1.6% at the beginning of the week followed by a sudden spike ranging from 0.5% to 0.8% by mid-week. Shortly after, they began to diverge: the AUD decreased by 0.5%, the NZD remained steady, and the JPY underwent a steep decline of 0.9%.
Pacific Historical Trends
Source: Yahoo Finance and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency. The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.
From the week spanning February 5th to February 9th, there is a general trend of depreciation among the currencies against the U.S. dollar. The New Zealand Dollar (NZD) increased just under the lower bound after enduring a significant decline. The South Korean won (KRW) managed to resurface above the lower bound but eventually fell below it once again. Similarly, both the Australian dollar (AUD) and Japanese yen (JPY) seem to be following the same pattern of an initial downturn followed by a small increase before falling again. Luckily, the JPY managed to stay above the rolling three-month average, whereas the AUD momentarily dipped just below it before recovering.