As soon as the news regarding the easing of monetary policy started getting out, the dollar started to weaken against all the other major currencies. Against the British pound and the Euro, US Dollar Tumbles after Bernanke Testimony. As the forex trading opened on Wednesday, U.S Dollar lost 1.15% against the Euro and stood at 1.4137. One more reason for the Euro’s increase against the dollar is the strong GDP figures for the second quarter released by China. There were apprehensions that the Euro crisis will have an impact on the china’s GDP. But as it turned out, it didn’t have an impact and the Euro strengthened its position against the dollar. Also the British Pound strengthened by .81% to 1.6042 during the early hours of the trading

Even against the Japanese Yen and the Swiss Franc, US Dollar Tumbles after Bernanke Testimony. U.S Dollar fell by .1% against the yen, while it fell by .75% against the Swiss Franc. The dollar index, which is a measure of the performance of the dollar against the 6 other major currencies also fell by 1%. Bernanke had cautioned the policy makers against expecting robust U.S. Economic growth in the immediate future. He also added that the Unemployment levels have come done only marginally and still there is a lot of work to be done on that front.

Debt ratings in Ireland fell to junk status, after Moody’s downgraded the country’s rating. Ireland followed Portugal and Greece in current bond rating downgrades. The European Union and International Monetary Fund have insisted that Greece pass legislation before disbursement of next of a 12 billion bailout program rescue. European finance ministers will meet on Friday to discuss and approve Greece’s rescue and funding options. Some ministers recognized earlier this week that to construct stronger debt groundwork, some form of Greek default may be required. Policymakers also established that Spain and Italy would need to be closely monitored and emergency measures would be needed to prevent disruptions in financial markets.

Unemployment reports on Wednesday from the UK reported that worker claims jumped higher from last two years. The UK added 24,500 jobless claims, more than what financial analysts across the globe expected. However, the UK’s 7.7% jobless rate expectation remained unmoved. Presently, the pound steeply has risen 0.25% versus the fragile U.S. dollar, hitting 1.5951.U.K. average earnings also increased slightly at 2.3%, rising from second quarter figures, which were slightly higher than 2.1% analysts’ forecasts

Another report shows that the industrial production in China went up by 15.1% in June. This is the best month for China in terms of industrial production since May 2010. One more reason for the Canadian dollar strengthening against the U.S.Dollar is the rise in the crude oil price to $97.96, which is a three day high on the New York Mercantile Exchange. As the USD/CAD hits 3-day low, there was another concern regarding the U.S. dollar that it might still weaken, as Ben Bernanke was supposed to appear before the law makers to provide testimony for the poor performance of the U.S.Economy inspite of the stimulus packages introduced by the Federal Reserve.

As far as Canada is concerned, raw materials and oil are one of their top 2 exports to different countries. With respect to the performance of the Canadian Dollar against the Euro, Euro becomes stronger by another .2%, again because of the news from China. As the USD/CAD hits 3-day low, the Euro hit a high of 1.3539 against the Canadian Dollar. Among all these currency movements, there is also a report that the U.S.Import prices are coming down, at a time when the country gears up to take an Inventory on the existing crude oil and publish the findings.

On other hand, Reis in its second quarter report show decline in apartment occupancy rates, office occupancy rates at horizontal level, and malls with increased occupancy rates. As per forex summary for week ending July 8th, graphs represents about highest percentage of job losses since post World War II recession, show steady decline in job offers since economic recession started in 2007, at maximum level since World War II. First graphical representation regarding employed population ratio, participation and unemployment rate show increased unemployment rate at 9.2%, labor participation at 64.1%, lowest since 1980s’, along with employment population ratio declined to lowest level at 58.2%, since recession.

Besides, second graphical representation about employment rate for part-time jobs show rising trend at 8.5 million during same period with alternate measurement of labor under-utilization called U-6 increased marginally to 16.2%, showing a modest growth of 0.4%, since end of last year. Third graphical representation show duration of unemployment as percentage of total labor force in four weekly categories like less than 5 weeks, 6-14 weeks, 15-26 weeks, and 27 weeks and above. 27 weeks and above category has risen for two months consecutively at 4.1%, along with increase in less than 5 weeks category. On other hand, graphical data from Institute of Supply Management in June show modest growth of non-manufacturing index at 1.4%, along with modest increase in employment diffusion at 0.1%, as per forex summary for week ending July 8th. Graphical data from Reis show office vacancy rates show modest increase of 0.1% since last quarter in 2010. Apartment vacancy rates show decline of 0.2% since beginning of this year, though this is higher compared to last two years. However, mall vacancy rates have risen by 0.2% along with retail areas at 0.1%, a record set twenty years back.

The US employers increased the number of their workers by about 157,000 in June, on a seasonally accustomed root. This was a lot higher than the estimated increase of 67,000 jobs and a hefty amount of improvement was recorded from the May change of 36,000. This led to a decrease in the demand of secure currencies as President of the European Central BankJean-Claude Trichet indicated that he may lift up the interest rates once more in the prospective months subsequent to when he increased the main rate by 25 basis points.

The USD rose and was traded at around 0.8 today. The EUR rose as well with a difference of 0.0112. However, the JPY fell. Therefore, Swiss Franc fell down in comparison of the most traded currencies as a consequence of the recovery for the global economy and a declined demand for assets and currencies that were safe.

The head of the strategies of foreign exchange, at Commerzbank AG, Ulrich Leuchtmann, viewed his opinion in terms of the recent fall of Franc by saying that the Swissie was a good currency especially if fleeing Europe was your choice. The short term risks once abated will unwound the shift. There will a weaker Swissie then.

The losses incurred to the US unit against the Taiwanese counterpart were backed up with the reason that these losses were partially recouped by the intervention of the central bank of the country in the late trade in order to deaccelerate the appreciation of the local currency and maintain the country’s global competitiveness.

The dealers also added that the decreasing trend of the US dollar was highlighted as soon as the Taiwanese FX market opened which was longed by the increasing current account surplus.

The dealers also reported that this increase in the value of Taiwanese dollar is being backed up by the Chinese yuan which is expected to continue to increase the interest rates so as to fight against the inflation problem.

Moreover, the gains achieved on the local bourse in the early trading in the forex market also forced pressure on the US dollar to decrease, but the situation eased a bit after the index fell back on the FX market.

The weighted index rate closed at 0.27 per cent ending at 8,749.55 points on one hand and by having the foreign institutional investors selling out about NT$1.72 billion or US$59.73 million on the other. Moreover, the total turnover of the trading session amounted to US$739 million.

The core level of reserves in the country stands at a range of $11 billion which are quite low than the reserve levels that touched a level of $12.6 billion in the fiscal year 2005. These calculations of the forex reserves are provided with the subtraction of the loan obtained from the IMF.

Since, 2006, the forex reserves is showing a constant growth of 7% per year but for the past three years this rate has been increased to a rate of 18%.

The reason for this growth in the Forex reserves can be attributed to the standby loan option of the International Monetary Fund amounting to $11 billion which were given to the country in the fiscal year of 2009. These standby loans were the aftermath of the five tranches that aggregated to $7 billion or a slightly over this amount. This information was provided by the research note of the investCap here this week.

In regards of the present fiscal year, the Forex reserves of Pakistan have showed a gain of 9% raising the reserves to $17.5 billion amid the rising export situation and foreign remittances of above $11 billion.

As a result of these circumstances, the Rupee showed a 0.5 per cent declining trend against the USD which caused a surplus in the current account of the country after being deficit for a period of seven years.

It is estimated that the rise started with four paisa previous week where from then it raised to much more than the hike observed in past two to three months.  The new growth in the value can be attributed to the inflow of funds from outside and good profit at market. The analysts are also suggesting that this step was reached after careful observation of transactions and positions of several currencies in global market. They are also confident on withstanding more rises in the value of rupee in coming month or two which will give great opportunity to the banks to sell the US dollars with profit due to the inflowing funds. This rise is also attributed as riding crude prices that affected the dollar to great extent. Any reason given but it is true that value of rupee is steadily increasing opposite to the failure in equity sector.

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