Pacific Exchange Rates Report for November 11th – 22nd
By: Gabriel Kukulka, 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.
Between November 11th and November 22nd, all tracked Pacific exchange rates strengthened against the USD, reflecting a rise in the value of their respective domestic currencies. The New Zealand dollar (blue) saw the largest increase, climbing 2.1% by the end of the two-week period. The Australian dollar (green) followed closely with an increase of 1.2%. Despite spending most of the period weaker relative to the USD, the South Korean won (red) surged on November 21st to finish 0.5% higher. Meanwhile, the Japanese yen (maroon) saw a modest appreciation, ending the period with a 0.4% gain.
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.
Since October, all four tracked Pacific exchange rates had been steadily weakening against the USD. However, the past two weeks of November marked a partial reversal of this trend. The Australian dollar, despite remaining above the upper boundary of its three-month rolling average, strengthened over the past week. The Japanese yen, which had been consistently weakening since early October, also showed signs of recovery, though a slight downwards trajectory persists. Meanwhile, the South Korean won and the New Zealand dollar continue to sit above the upper boundaries of their three-month rolling averages, with both experiencing a slight strengthening of their domestic currencies during the past two weeks.
Additional Reading
This article examines the Japanese yen and the Bank of Japan’s (BOJ) plans to raise interest rates during their December meeting. The decision is driven by a modest improvement in Japan’s economy and growing concerns over the yen’s depreciation. Additionally, the BOJ is wary of potential inflationary pressures stemming from proposed tax cuts and tariffs under the incoming Trump administration. The central bank believes it must act now, as waiting until their next meeting in January risks allowing the yen to weaken further. This move also addresses mounting inflationary concerns. Notably, the BOJ had already raised rates in July, citing the yen’s decline, which was increasing import costs and fueling inflation. By increasing rates in December, the BOJ aims to sustain the rise in consumption observed in the previous quarter.
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