Raynor de Best
Content expert covering payments and (crypto)currencies
Forex exchange rates worldwide - statistics & facts
The exchange rates of several currencies are expected to change in 2024, fueled by changes in central bank interest rates, inflation, and political climate. Inevitably, some of these changes can come about quite abruptly: The euro lost heavily against the U.S. dollar on June 10, 2024, after France’s Emmanuel Macron called for snap parliamentary elections. Nevertheless, what are the main forex trends going into the second half of 2024?
Forex trends can be difficult to predict, even more so in 2024 with all its macroeconomic and political uncertainty. It is likely further changes are to come, with such risks reflecting themselves in the underlying FX rates.
Yen value: More challenges over time
Listed as the world's third most traded currency, the Japanese yen (JPY) continued to grow weaker. In 2024, the Japanese currency lost 10.5 percent of its value against the U.S. dollar due to growing interest rate differences between the two countries. This impacts Japanese import costs, and, consequently, pushes inflation in the country. The Bank of Japan (BoJ) initially tried to combat this by buying government bonds. The central bank opinion seemed to change in April, now favoring an increase of interest rates. As of June 2024, the country awaits inflation figures following rising import costs and potential wage increases from earlier in 2024 to come into effect, potentially impacting such a policy.Cuts in interest rates, when and where?
Japan’s interest rate situation is different from other countries. Loan costs elsewhere are at their highest in about 20 years. Analysts wondered when the economy felt the effects of this, eventually making these costs come down. The European Central Bank (ECB) cut its key rate to 3.75 percent, down from its all-time high. The cut follows Canada, Sweden, and Switzerland, despite lingering inflation across the different European nations. The UK and the United States are expected to delay their cuts to August and September, respectively. The Bank of England (BoE), they say, will wait until after the country's snap elections in. The Federal Reserve had to delay its announcement, as the U.S. unemployment rate did not grow fast enough in May to warrant a rate cut.Election results and forex
Possible political change already caused upheavals in 2024's forex markets. The euro weakened against the pound after France called for snap parliamentary elections, following far-right gains in the EU elections. Investors, however, were also not sure about other voting results. Mexicans voted for the left-wing Morena coalition's Claudia Sheinbaum to become the country's first female president. The size of her victory, however, led to Mexico's peso recording an eight percent loss against the U.S. dollar. The Morena coalition hopes to reform Mexico's laws, potentially impacting the country's heavy inflow of remittances from the U.S. Results from India's election - where Prime Minister Narendra Modi won significantly fewer seats than expected - caused the Indian rupee to tumble against currencies like the euro.Forex trends can be difficult to predict, even more so in 2024 with all its macroeconomic and political uncertainty. It is likely further changes are to come, with such risks reflecting themselves in the underlying FX rates.
