Pacific Exchange Rates Report for January 27th – 31st
By: Gabriel Kukulka, The Quinnipiac University Economics Research Team
Pacific Currencies Index
Source: Yahoo Finance and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency) and then indexed to be 100 at the start of the period.
Between January 27th and January 31st, the Australian dollar (green), the South Korean won (red), and the New Zealand dollar (blue) all increased in value relative to the United States dollar. The most significant increase relative to the United States dollar was the Australian dollar, which finished up 1.4%. This was followed by the South Korean won up 1.1% and the New Zealand dollar increasing at 0.9%. The one tracked pacific currency to see a decrease in value relative to the United States dollar this week was the Japanese yen (maroon), which declined steadily to end down 1.0%.
Pacific Historical Trends
Source: Yahoo Finance and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency). The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.
As February approaches, the Australian dollar, South Korean won, and New Zealand dollar all show signs of strengthening relative to the United States dollar. Although the South Korean won experienced a brief dip in late January, it has since regained upward momentum, spurred by a notable rebound this week. In contrast, the Japanese yen appears to be weakening against the United States dollar. After ending 2024 with considerable gains, the Japanese yen has seen a modest decline in the closing weeks of January. It’s performance amid this volatility will be an important trend to monitor in the coming weeks.
Additional Reading
After raising short-term interest rates by 0.5% last week—the highest level in Japan in 17 years—Bank of Japan (BOJ) policymakers met again on Monday, February 3, to discuss the possibility of further interest rate hikes. Concerns over a weakening yen, financial overheating, and inflation fueled the debate, though some policymakers warned that additional rate increases could push inflation even more beyond the 2% target level, which Japan has been at for over three years. Other Experts argue that persistently low rates have weakened the yen, driving up import costs and hurting consumption in the process. BOJ leaders are also monitoring potential economic shifts following President Donald Trump’s inauguration.
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