$ it laughed.
Former Morgan Stanley currency strategy analyst Stephen Jen once proposed the famous "dollar smile curve": the US dollar will strengthen in both economic downturn and prosperity.
Recently, the US dollar "smiled again" - under the "eagle-like" rate hike of , the US dollar index hit a 20-year high, and non-US currencies fell sharply.
Due to the current position of the US dollar in the global monetary system, international trade generally uses US dollar settlement. When a country's local currency depreciates significantly against the US dollar, it will cause the country's import costs to rise simultaneously and significantly. So we see that among non-US customers recently, requires price reduction and discount, delay payment , and cancel orders, .
The following are some countries where the local currency of depreciates the largest amount of since this year. For foreign traders ship these markets, be sure to pay attention to the safety of the payment!
NO.1 Euro
Since this year, the euro against the US dollar has fallen by 15%. On August 22, the euro against the US dollar fell below par for the second time this year, falling to 0.9926, and was the lowest level since 2002 . And the depreciation of the euro seems to have just begun.
Morgan Stanley expects the euro to fall to 0.97 this quarter as the Federal Reserve becomes harder; Nomura International Group's target for the euro to the U.S. dollar at the end of September was 0.975, after which the market may expect a level of 0.95 or lower as pressure on energy supply increases the risk of power outages.
Economists expect the euro zone CPI to reach 9% in August, setting a new record high and more than four times the target level of 2%, while the euro's depreciation has made inflation problems worse by raising import costs.
NO.2 pound
pound pound suffered the worst month since the 2016 Brexit referendum in August this year. pound pound fell by more than 4% against the US dollar in August. The pound has fallen 11.8% against the dollar this year, making it one of the worst-performing currencies in the G10.
Goldman Sachs believes that the UK may fall into recession in the fourth quarter. Citi predicts that the inflation rate in the UK will exceed 18% in January 2023.
NO.3 Japanese yen
In the Tokyo foreign exchange market on September 1, the Japanese yen exchange rate once fell to above 139.50 yen for 1 US dollar, setting a low point in 24 years. , the yen depreciated by nearly 4% in just one month in August. Since the beginning of this year, the yen has fallen by more than 18%!
However, in the case of the depreciation of the yen, Japan Bank is not prepared to take measures to intervene. Bank of Japan President Kuroda Haruhiko emphasized in a recent interview that the judgment of financial policies is not based on the trend of the yen, but on the basis of prices.
depreciation is indeed beneficial to exports, but it also leads to an increase in the price of imported raw materials. A survey by Imperial Data Bank of Japan showed that due to the rapid depreciation of the yen, about 60% of the companies surveyed said their performance was negatively affected. Among the more than 10,000 companies surveyed, 61% said the depreciation of the yen has brought about a "negative impact". Imperial Data Bank analyzed that the depreciation of the yen has driven the expansion of exports without obvious signs, but has pushed up import prices.
NO.4 Korean won
Korean won exchange rate against the US dollar has fallen to its lowest since 2009. Judging from the trend so far this year, Korean won has fallen 11% cumulatively against the US dollar.
South Korea's central bank governor Lee Changyong said that if South Korea's prices continue to get out of control, it is not ruled out that the Federal Reserve will raise interest rates significantly. At present, the Bank of Korea has raised its forecast for the increase in consumer price index (CPI) in South Korea this year to 5.2%.South Korea's CPI rose 6.3% year-on-year in July, up from 6% in June, and set a record high since the financial crisis in November 1998.
NO.5 Turkish lira
Since this year, As of mid-August, the Turkish lira has depreciated by about 26%.
Turkey is currently the "king of inflation" in the world. In July, the inflation rate increased by 79.6% year-on-year, setting a 24-year high. Türkiye's most populous city, Istanbul, saw prices rise 99% in July compared with the same period last year.
Businessman working in the retail industry in Turkey said that in the past, they always bought food in large and small bags, and they were not ruthless. They checked out for less than 100 lira . Now they can buy at most a few kilograms. They have to pay close attention to non-essential items such as desserts, snacks, and soda. Turkish people admitted that basic daily necessities have become luxury goods and “in a very bad situation.”
NO.6 Argentine peso
In July, Argentine inflation rate reached 71%, setting a new high in nearly 30 years. Economists have expected Argentina's annual inflation rate to soar further to 90% by the end of this year! At the same time, the Argentine peso against the US dollar parallel currency exchange rate (black market) broke through the psychological threshold of 1 US dollar against 300 peso on July 19, and fell to a historical low of 1 US dollar against 338 peso on July 22. In the official market, the Argentine peso has also depreciated by 37% against the US dollar in the past year.
Argentina is an outward-looking economy, with a large number of consumer goods relying on imports. The sharp rise in international energy, raw materials and other commodities has already pushed up the country's imported inflation, and the sharp depreciation of the currency further exacerbated the pressure of imported inflation. In order to prevent hyperinflation, the central bank of Argentina sold the US dollar every day to avoid the depreciation of the peso.
In addition, the Argentine Central Bank issued Announcement No. A7532 on June 27, will expand the application of imported foreign exchange control measures to the import financing system for services and non-automatic license products , for a period of 3 months to September 30 this year. Recently, Argentina customs has also begun to rectify import and export trade violations. The rectification campaign mainly involves false reporting of goods prices in import and export trade, such as low-export invoices and high-export invoices. The first round of rectification campaign involves 13,640 businesses and 722 companies, with a total FOB price of goods of about US$1.25 billion.
NO.7 Egyptian pound
Russia and Ukraine smashed the Egyptians' jobs - the global wheat prices soared, Egypt is the world's largest wheat importer, and has suffered a severe blow. The cost of some foods has risen by 66%, pushing the inflation rate to 15%.
Currently, the Egyptian pound exchange rate is 19.1 to 1 US dollar, the second lowest on record, only below this rate during the winter 2016 period.
There have been feedback from foreign traders that exports to Egypt are stranded at the port because buyers cannot issue letter of credit .
NO.8 Hungarian Forin
After suffering the escalation of the situation in Russia and Ukraine, the major currencies in Eastern Europe have also been hit by another blow from the recession of the euro zone and the depreciation of the euro.
Hungarian forin's performance this year is even worse than the Turkish lira, and its depreciation against the US dollar has exceeded 26%. Hungarian media even reported on the topics of "Folin becomes the weakest currency in the world", "Folin was hit hard", "Folin fell freely against the US dollar and the euro", , etc.
NO.9 Polish Zloty
Since the end of February this year, Polish Zloty has depreciated by 12% against the US dollar. Currently, the inflation rate of Poland has reached 15.7%.
Poland, which has always "added damage to Russia", has also encountered the backlash of sanctions.Poland is a major coal power generation in Europe and the largest coal producer in the EU, , and its annual coal production exceeds 50 million tons, but it still imports about 12 million tons of coal every year. Millions of Polish households will face the dilemma of a coal shortage in winter as the Polish government decides to impose sanctions on Russian coal.
NO.10 Ukrainian hryvn
Ukrainian currency hryvn has depreciated by nearly one-third and may continue to depreciate in the future.
In order to make up for the deficit, the Ukrainian Central Bank is now opening the banknote printing machine . In June this year alone, the Ukrainian Central Bank printed as much as US$3.6 billion. Currently, Ukraine's inflation rate is 20%, and is expected to reach 30% by the end of the year.
, the London-based Center for Economic and Political Research (CEPR), issued a report requiring Ukraine to reduce its reliance on printing money and monetary taxes, and issued a warning that if Ukraine continues to maintain its current monetary policy, it will trigger hyperinflation, currency crisis and even banking crises.
According to data from International Monetary Fund (IMF), as of June this year, the foreign exchange reserves of emerging and developing countries decreased by US$379 billion, the largest shrinkage since 2008.
So, what is the best currency against the US dollar in the first half of the year? The answer is Russian ruble .
In the early stages of the Russian-Ukrainian conflict, a series of severe sanctions imposed by the West caused a sharp drop in the ruble exchange rate. Surprisingly, after about 20 days of sharp depreciation, the ruble exchange rate rose against the trend and entered the road of appreciation. The ruble has appreciated by 45% to 50% since the beginning of the year.
