Good morning and welcome to today\u2019s foreign exchange market commentary on Monday the 17th of January.<\/p>\n
Monday\u2019s biggest development was Standard & Poor\u2019s downgrading the European Financial Stability Facility (EFSF). The EU region\u2019s lifeboat fund slipped a notch to AA+ from AAA. This was however, pretty much expected after France lost its top sovereign rating on Friday. The rating\u2019s agency had warned that if any of the main funding countries (Germany, France and the Netherlands) lost their top rating, the EFSF will lose its crown as well. However, the fund got support from Japan as the country\u2019s Finance Minister Jun Azumi announced today that faith in bonds issued by EFSF remains undiminished. <\/p>\n
Meanwhile, markets remained quiet yesterday with the US busy celebrating Martin Luther King\u2019s day holiday. Chinese GDP numbers came in at 8.9 pc for the December quarter, beating analysts\u2019 forecast of 8.7 pc. Though this is the weakest growth in two years, markets reacted positively with the Hang Seng index rising 3.24 pc and the Nikkei ending 1.05 pc higher.<\/p>\n
Talking about the Chinese growth story, Chancellor George Osborne\u2019s impending Far-East mission assumes significance as many analysts predict the renminbi\/Chinese yuan gaining prominence as the world\u2019s alternate reserve currency in future. Chancellor Osborne would certainly like to turn the City into the first non-Chinese hub for renminbi trading. London does enjoy a competitive advantage though there is strong competition from other financial centres. However, much of the success will depend on how the Chinese loosen their grip on the yuan. The renminbi has been pegged against the dollar for years with frequent frictions between the two largest economies and the US accusing the Chinese of keeping the currency low artificially for export advantages. <\/p>\n
GBP\/EURO \u2013 1.2040
\nGBP\/US$ \u2013 1.5374
\nGBP\/CHF \u2013 1.4576
\nGBP\/CAN$ – 1.5564
\nGBP\/AUS$ \u2013 1.4751
\nGBP\/ZAR \u2013 12.3048
\nGBP\/JPY \u2013 117.74
\nGBP\/HKD \u2013 11.9368
\nGBP\/NZD \u2013 1.9206
\nGBP\/SEK \u2013 10.6334<\/p>\n