Pacific Exchange Rates Report for October 14th – 25th

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.

From October 14th to October 25th, Pacific exchange rates showed strong gains against the U.S. dollar, with each currency in the group surpassing a 1.0% increase. Leading the way, the South Korean won (red) appreciated by 2.2%, marking the largest rise among the tracked currencies. The Japanese yen (maroon) followed with a 1.5% gain. The New Zealand dollar (blue) also performed well, increasing by 1.3%, while the Australian dollar moved in close alignment, ending the period with a 1.2% rise. This consistent growth across all four currencies highlights a period of relative strength in Pacific exchange rates.

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, Pacific exchange rates have demonstrated a steady upward trend, indicating a gradual weakening of the Australian dollar, Japanese yen, South Korean won, and New Zealand dollar against the U.S. dollar. Notably, the Australian dollar has climbed to levels not seen since mid-August, and the Japanese yen has reached values last observed in July. Meanwhile, the South Korean won achieved a three-month high this past week, marking a significant exchange rate milestone. The New Zealand dollar is also showing growth, albeit at a more moderate pace. It will be intriguing to monitor these currencies as they approach the close of October.

Additional Reading

Why the Japanese Yen is Hovering Near Three-Month Lows Against the Dollar

The article examines the factors contributing to the Japanese yen's recent decline to three-month lows against the U.S. dollar, with a major factor being the interest rate disparity between Japan and the United States. As currencies with lower interest rates often weaken, Japan's long-standing negative rates have driven the yen's underperformance compared to the dollar. Experts note that the yen currently yields the lowest returns among the ten most-traded global currencies, offering much lower returns than the euro or U.S. dollar. Additionally, uncertainty surrounding the upcoming elections in both Japan and the U.S. may be adding further volatility to the exchange rate.