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12.10.2007 - Weekly Currency Brief

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Date: 2007-10-12 15:48

Confidence is back on the markets and investors are more willing to take risks. Last week, emerging markets’ currencies gained the most, especially against the weakening American dollar. The Polish currency reached its all-time low against the Swiss franc.

 

Tuesday’s publication of the US Federal Open Market Committee caused equities markets to rally. The Fed suggested another interest rate cut in the US til lthe end of the year. The mood of investors improved and risk aversion declined causing an outflow of capital from the US in search for more risky investments. The American dollar lost ground on all fronts. The EUR/USD increased from $1.4015 to $1.4238 on Thursday. Better than expected reading of the US Core Retail Sales publication (actual: 0.4%; Forecast: 0.3%) did not help the greenback as the EUR/USD oscillated around $1.42 till the end of the week.

Increasing appetite for risk made the Polish Złoty an attractive investment. The local currency gained against the euro as the EUR/PLN dropped from zł.3.7564 to zł.3.7340. The Złoty also advanced against a weakening American dollar gaining from zł.2.6780 to zł.2.6260 throughout the course of the week. Very satisfied can be consumers who have their debt denominated in the Swiss franc. The Złoty reched its all-time high against the Swiss currency at zł.2.2061.


Adam Narczewski