The foreign exchange market (forex) is a market where world currencies are traded 24 hours a day. For some, it’s simply a mechanism for changing one currency into another. Multinational corporations doing business in various countries rely on these markets to exchange currencies from around the world. However, the market is also occupied by traders who bet on movements of currencies relative to each other.
The Euro is trading nearly flat on Friday after recovering from an early session setback. The stronger U.S. Dollar is fueling the selling pressure.
The greenback is being supported by the prospect of a more aggressive pace of Federal Reserve interest rate hikes, while the single-currency is being weighed down by investor concerns about the economic costs of war in Ukraine and a potentially nail-biting election in France, according to Reuters.
At 11:09 GMT, the EUR/USD is trading 1.0879, down 0.0001 or -0.01%. On Thursday, the Invesco CurrencyShares Euro Trust settled at $100.78, down $0.26 or -0.26%.
Reasons for that rebound include support from the Russian government, as well as ongoing purchases of Russian energy from the European Union and other nations, Jane Foley, head of FX Strategy for Rabobank London, told CBS News. Even with the broad-based sanctions, Russia continues to export oil, gas and coal, with Bloomberg Economics estimating that the nation’s energy exports will surge by one-third this year to $321 billion.
President Vladimir Putin also has put “massive capital controls” in place to stabilize the ruble, bolstering the currency, Foley noted.
Sri Lanka’s rupee has plummeted to a historic low, making it the world’s poorest-performing currency, adding to the country’s greatest economic crisis since independence in 1948.
“After Rajapaksa ended emergency rule mere days after it was established, the Sri Lankan rupee hovered near Sri Lankan Rupee 302.04 per US dollar on Wednesday, trailing even Russia’s rouble.” According to the Financial Times.
Last Monday, the 22-million-strong island nation’s diesel supply ran out, causing a massive power outage.
The economic crisis brought on by a low foreign exchange reserve has spurred anti-government protests around the country, some of which have become violent.
Sri Lanka has been roiled by violent protests for the past week, as public outrage over the government’s handling of the island’s economic crisis has spilled into the streets. Much has happened since then.
Many protestors disobeyed President Gotabaya Rajapaksa’s 36-hour curfew.He subsequently declared a state of emergency, which was widely condemned by the public and opposition MPs until being repealed by the President earlier today.
According to critics, the foundation of the crisis, which is the worst in decades, is economic mismanagement by successive governments, which established and maintained a dual deficit—a budget deficit as well as a current account deficit.
Sri Lanka’s foreign exchange reserves have plummeted by 70% in the last two years, to just $2.31 billion in February, leaving Sri Lanka unable to import basic necessities such as food and fuel.
The dollar gained on Monday, rising for three straight sessions, as civilian killings in north Ukraine and the prospect of increased sanctions pushed investors to seek safety in the greenback.
The U.S. currency also continued to benefit from a strong non-farm payrolls report for March that backed expectations for a hefty half a percentage point tightening by the Federal Reserve at next month’s meeting.
“The dollar is bouncing higher as geopolitical developments have darkened clouds over the global economy,” said Joe Manimbo, senior market analyst, at Western Union (NYSE:WU) Business Solutions in Washington.
Check out the major currency pairs in major corners of the world. If you need more information on the currency pairs from the Americas, Asia, Europe,, you have come to the right place.
Prices of food are going up in many countries in North Africa and the Middle East.
In Egypt as Ramadan nears and spending rises the local currency has lost 17% of its value.
“People’s joy in welcoming Ramadan is different this year as this is the second Ramadan after Covid-19. Yes some prices are rising a bit and are different from other places, but people are shopping because they are happy that Ramadan is here and that the once a year season has arrived”, said Mahmoud Khaled, a resident of Cairo.
Another resident, Dalia Amr, confirmed the increase in food prices.
“Yes, the prices might be higher but the people are shopping (for Ramadan goods) like every year because they like to do something new and be happy as they welcome Ramadan”,
Egypt is a leading importer of wheat from Ukraine and Russia. The conflict between the two countries is affecting supplies.
The authorities have started implementing ways of stabilizing the economy.
“The devaluation of the currency to the US Dollar affected us and restricted the sales, as some goods are expensive while other prices are still fine”, concluded merchant Sadat El khateeb.
The Egyptian government has already started talks at the IMF over a new assistance package, the third in six years.
“In response to tighter funding conditions, emerging markets should tailor their response based on their circumstances and vulnerabilities. Those with policy credibility on containing inflation can tighten monetary policy more gradually, while others with stronger inflation pressures or weaker institutions must act swiftly and comprehensively.
“In either case, responses should include letting currencies depreciate and raising benchmark interest rates. If faced with disorderly conditions in foreign exchange markets, central banks with sufficient reserves can intervene provided this intervention does not substitute for warranted macroeconomic adjustment.”
Just how effective this will be for the African nations who are encouraged to do it, remains unknown.
The parliament adopted its resolution for a Draft Supplementary Act on the Pact.
The ECOWAS Parliament on Thursday moved a step closer toward achieving a single currency for the sub-region as it adopted the draft resolution on the Macroeconomic Convergence and Stability Pact.
The pact, which was adopted at the closing of its First Ordinary Session in Abuja, was a critical prelude to achieving the criteria for Member-States’ adoption of the single currency – the ECO.
The parliament adopted its resolution for a Draft Supplementary Act on the Pact.
This followed deliberation at Plenary on the submissions by its Joint Committee on Macro-Economic Policy and Economic Research and Committee on Administration, Finance and Budget.
The resolution, which would be transmitted to the Commission, sought to ensure macroeconomic policy coordination with the aims of ensuring a viable economic and monetary union as well as reinforce macroeconomic stability.
In the presentation, the Joint Committee, chaired by Kebba Barrow, highlighted that the pact shall be implemented in two phases.
He said that the resolution also sought to strengthen the convergence of Member States’ economies, including monetary and financial cooperation.
Mr Barrow added that it also shall define the procedures for the adoption of as well as the modalities for implementation of national convergence programmes.
According to him, the first phase which shall focus on convergence is to run from January 2022 to December 2026 while the second phase will centre on stability and shall run from January 1, 2027.
Meanwhile, other resolutions adopted by Parliament bordered on issues such as consideration on the political situation in Mali, discussions on the post-election situation in Benin, Burkina Faso, Cote D’ Ivoire, Ghana, Guinea and Niger.
They also included Trade, Customs and Free Movement as well as rules for the management and award of ECOWAS mark of conformity to ECOWAS standards.