Exchange Rate Now!

Just when everyone thought that we had recovered from the global financial crisis which started in late 2008, the Dow Jones, NASDAQ and S&P 500 are now reeling from a long overdue aftermath and plunged in late Feb 2010.

The direct impact on forex led the a spike in US Dollar against major currencies like the Euro and the Japanese Yen. The hope is now on the drop in unemployment rate to stabilise the economy and bring back the much needed confidence into the stock markets around the world and as a result bring more predictability into the forex market.

As at 6 Feb 2010, the US Dollar was trading at 

1 U.S. dollar = 0.733460466 Euros

or  Euro = 1.3634 U.S. dollars. Nowhere near the levels last seen in Dec 2008 but surely a worrying sign even for USA, as a appreciating US Dollar may hamper exports and put a damper on economic growth.

Adding more complexity to the equation is the result concern on European debts. Countries in European Union (EU) like Greece, Romania, Spain, Portugal, Turkey and other countries in Europe like Iceland still could not shake off the stigma of an imminent collapse in financial system. If this scenario truly materialize in the Eurozone, it could lead to a field day for forex traders who will surely punt further on the US Dollar.

A possible saviour in this period is for Sovereign Wealth Funds to step in. The much necessary cash injection will not only balance the books for these countries but also inject a confidence dose towards the eventual recovery of the global financial system, something everyone can finally believe is happening. And hopefully after this belief, reverse the trend in the stock market decline.