Dubai: The dollar remains the world''s premier currency. It still accounts for nearly two-thirds of all foreign reserves. Moreover, the recycling of excess savings globally into US capital markets enabled US consumers to buy imported goods and real estate far beyond their means during the great economic boom, and also enabled the US government to run immense fiscal deficits to offset the great economic bust.
Stronger-than-expected results from Goldman Sachs and JPMorgan Chase helped Britain''s financial stocks rally strongly, in spite of more mixed results from Citigroup. The rally in fin-ancials mirrored a broader increase in risk appetite, which helped drive most equity indices higher. As a result the appetite for safe havens such as the dollar has diminished and there is more demand for riskier currencies.
The European Central Bank (ECB) has cut its benchmark rate by three percentage points since October and is expected to cut its headline rate by another 25 basis points to one per cent in May as the euro zone struggles in its worst recession since the currency was created.
With the global economy in its worst downturn in recent history, inflation is slowing globally but some investors are worried that huge cash injections by the world''s central banks could spark inflation in the future.
Despite the downward economic spiral, the ECB has repeatedly ruled out cutting rates to zero, and has kept rates noticeably higher than many of its peers, including the US Federal Reserve, the Bank of Japan (BoJ) and the Bank of England (BoE).
Range for previous week: $1.3014 - $1.3392 (Dh4.7800 -Dh4.9189)
Range for this week: $1.2950 - $1.3454 (D4.7565 -Dh4.9417)
The sterling was among the best performers this week, rallying against all other leading currencies after strong showings on UK equity markets by financial stocks.
The pound gained one per cent against the dollar over the week to $1.48 levels after briefly climbing above the $1.50 level mid-week. Figures next week are likely to cast further gloom on Britain''s job market and public finances, although inflationary pressures are forecast to have eased.
Range for previous week: $1.4579 - $1.5067 (Dh5.3548-Dh5.5341)
Range for this week: $1.4517 - $1.5129 (Dh5.3321-Dh5.5568)
Japan''s economy will continue to worsen as consumption weakens and companies slash capital spending, the governor of BoJ said, adding that he was watching how falls in share prices could hurt the nation''s financial system.
Japanese banks, facing losses when they report earnings in the coming weeks, are large holders of shares and the central bank fears a sliding stock market will force them to cut lending, further hurting an economy.
Japan''s economy shrank 3.2 per cent in the last quarter, the fastest contraction since the 1974 oil crisis. It is likely to keep shrinking for the first half of this year, economists say.
Range for previous week: 98.12 yen 100.73 yen (Dh0.03646 Dh0.03743)
Range for this week:99.00 yen 102.00 yen (Dh0.03601 Dh0.03710)