World Currency Observer
Exchange rates around the world

July 2, 2013 (see July 16 update below)

The US$ was down against the yen over the month of June, although still substantially stronger against the yen than a year ago. The US$ was also down against the Euro, and showed similar movement against the wide range of currencies in Europe and in Africa which are linked, officially or by policy, to the Euro. Outside these groups of currencies, the US$ was stronger pretty much everywhere in June. The US$ was also stronger against a broad range of commodities, particularly metals, including gold and silver (in other words, commodity prices generally fell in June). In the republics of the former USSR, the decline of the Russian rouble against the US$ outpaced that of the currencies of the other republics, leaving them, with the exception of Georgia, up against the rouble.

In Mongolia, the Oyu Tolgoi (Turquoise Hill) mine, which has been producing for several months, delayed the start of exports for several days beyond the announced mid-June target date. The mine is projected to be not only a major driver of world copper production (and thus copper prices) over the next thirty years. It will account for perhaps 1/3 of Mongolian GDP by 2020, which would make the Mongolian tögrög one of the world’s major copper currencies (other examples are Zambia and Chile). This publication has heard rumours (still unsubstantiated) that the mid-June date for the beginning of copper exports had been delayed because the very detailed agreement between the government of Mongolia and Rio Tinto had not settled the question of whether US$ export revenue would be deposited in Mongolian banks or offshore, which will have differing implications for the determination of the external value of the tögrög.

In Argentina, the “blue” dollar (parallel) peso market was frozen for the last few days of June at the request of the government, to smooth the introduction of Certificados de Depósitos para Inversión (CEDIN certificates). CEDIN certificates are being sold by the government of Argentina for dollars, and will be eligible to be used as currency for real estate-related transactions (purchases, renovations, etc). Early indications are that the peso/US$ conversion rate will turn out to be around 8/US$, roughly the same as the last-recorded peso/blue dollar rate. The official peso/US$ rate is 5.39.

Further progress is being made in the Euro zone towards a banking union, and Croatia has just joined the European Union, but there is still under-the-table thinking regarding how, if ever, the Euro might break up. While the usual idea is the withdrawal of weaker countries, an alternative scenario is for Euro1 and Euro2: the stronger countries (3 or 4) to issue their own Euro2 currency, while other countries continue to use the existing Euro (Euro1).

July 16, 2013 update

Currencies which were down against the US$ in June are generally still down in the first part of July, although it is too soon to conclude where they will end up. The same can be said of a broad range of commodities, with one exception being oil prices, which have been rising steadily. Some fundamental factors favoring the US$ may be catching hold, one of which is growing oil production in the United States, driven by technical changes in oil extraction, principally oil from shale deposits.

Latvia will adopt the Euro on January 1, 2014 after more than eight years in the European Exchange Rate Mechanism. The locking rate will be the .702804 lats/Euro it has been targetting in the ERM since May 2, 2005.

There have been a number of commitments of US dollars for Egypt from Middle Eastern countries since the coup. Mongolian copper exports from the Turquoise Hill mine have started (see above).