The Australian dollar had a volatile week. After stoping a downward trend on August 13 it seemed the currency was headed to the 0.92 resistance level. Instead US data, though weak, deflated the Aussie above 0.91. this reversal came during the Americas session where the AUD continued to climb until almost recovering fully on Friday. The market continues to speculate on when the Fed tapering will begin. The stronger the economic indicators out of the US are the case for tapering strengthens along with the USD. This week the opposite happened. Weak numbers, although to be fair not that far off expectations, drove the USD down versus in major pairs. The AUD received a further boost by commodities. Metals and energy received a boost from the tapering speculation as well as geo political events that could constrain supply. Indian Rupee touches all time low The INR continues to slide versus the USD. The government and the central bank have tried their best to defend the currency. The INR continues to be sold as capital continues to leave India. The outflows are further complicating the trade deficit as a weak currency has affected import prices with a direct inflationary impact. The government on one hand is trying to device a plan to attract investment while modifying the limits of allowable outflows. This sends a mixed signal to investors. Bring your money, but don’t take it out. Due to the lack of confidence given the economic slowdown in India, not a lot of investors are willing to add to the local economy if there are new limits being imposed on a regular basis.
Posted on: Sun, 18 Aug 2013 17:39:45 +0000
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