Dollar weakens against other Asian currency too
After weakening of US Dollar against Yen to historical lows it has now starting to weaken against other Asian currency too. This weakening of dollar may be attributed to the strong growth prospects of Asian economy and still uncertain US economic recovery.
Investors have pooled in $11 billion in Net Foreign Investments in India as against $10.3 Billion in Japan, giving a clear indication of possibility of high returns from Asian economies which doesn’t seem to be there with developed ones.
Investors are too cautious about US economy now and they are starting to increasingly bet for Asian markets. US dollar is very close to hitting historical low against Yen. NEKKEI 225 index fell due to stronger Yen as it feared loss to Japanese exports which would be caused by appreciated Yen. Goldman Sachs cut Japan’s gross domestic product growth forecast to 3.3% for this year, down from an earlier projection of 3.4%, and to 1.4% from 1.7% for 2011. Japan’s current-account surplus fell by a more-than-expected 18.2% in June from the year-earlier period, despite an increase in the trade surplus.
Crude Oil price on the other hand rose as US Dollar is weakening more and more. U.S. crude for September delivery rose 0.4 percent to $81.01 a barrel, having risen 11.6 percent since June. U.S. wheat prices fell 4.5 percent, adding to a 7 percent decline on Friday. Chicago wheat futures surged to a two-year high after Russia banned exports of the grain last Thursday, though prices come tumbling back on profit taking.