The Euro to Thai Baht (EUR/THB) exchange rate recorded gains on Thursday while the Euro to Russian Ruble (EUR/RUB) and Euro to Japanese Yen (EUR/JPY) exchange rates both softened on account of increasing oil prices and safe-haven demand due to geopolitical conflict between Saudi Arabia and Yemen.
Oil values have tumbled by around 60% since last July as a global glut dominated the market and production was kept at near record highs of 10 million barrels per day. Oil commodity currencies such as the Canadian Dollar (CAD) and Russian Ruble declined significantly as a result of weaker crude prices.
However, Thursday saw Saudi Arabia launch air strikes on Yemen, casting doubts over oil production and general uncertainty over the region, which saw the price of crude increase.
As a result of geopolitical conflict, safe-haven assets such as the Japanese Yen and Swiss Franc (CHF) rise in response, as an influx of investor sentiment goes their way.
Foreign exchange strategist Jeremy Stretch commented: ‘The news flow out of Yemen is causing a risk-off move. The Yen will remain pretty well-bid until there is a pause for breath in the risk-off dynamics.’
Russian Ruble (RUB) Exchange Rate Records Best Currency Performance of 2015
However, the Russian Ruble exchange rate is the star of the show on Thursday, advancing for the fifth consecutive day in what’s been the best currency performance yet in 2015.
The prospect of disrupted oil production has bolstered the Russian Ruble by 2.5% against the US Dollar (USD/RUB).
Analyst Iskander Abdullaev commented: ‘The Ruble is extending the rally as oil jumps on tensions in Yemen. At these levels, the correction in the Dollar/Ruble has overstretched and it’s a good level for profit taking.’
However, the Ruble could fall on account of easing tensions or Russian central bank key interest rate cuts on April 30th, the date of the next monetary policy meeting.
Aleksey Potapov commented: ‘I don’t think this rally is out of breath yet, but yields have shrunk considerably—I think there’ll be profit taking in the near term and I have started closing my long positions.’
Meanwhile, the Thai Baht was offered little support when Thailand’s exports recorded the most significant drop of the latter six months in February. Thai growth was recorded at 0.7% in 2014—a result of political tensions. However, exports make up a massive 60% of the economy and therefore February’s 6.14% decline was not only more than double forecasts, but proved ‘the outlook is not so good’ to economist Sarun Sunansathaporn.
Sunansathaporn commented: ‘Thailand’s economy is facing a downside risk.’
But it gets worse, Thailand’s imports rose by 1.47% in the year to $16.84B.
Industry expert Chutima Bunyapraphasara stated: ‘Thailand’s exports were pulled lower by a 12.5% drop in agriculture product and agro-industry shipments.’
Euro Exchange Rate Forecast: EUR/JPY, EUR/THB, EUR/RUB
The Euro to Japanese Yen (EUR/JPY), Euro to Thai Baht (EUR/THB) and Euro to Russian Ruble (EUR/RUB) exchange rates are all likely to fluctuate in the remainder of Thursday’s European trading with European Central Bank (ECB) President Mario Draghi speaking later in the session.
The central banker has the ability to impact the Euro exchange rate quite significantly; however, if safe-haven demand and oil prices continue to prop up the Japanese Yen and Russian Ruble, the effects of Draghi’s speech may be quite muted.
The Euro to Japanese Yen (EUR/JPY) exchange rate is reaching 130.7300. The Euro to Thai Baht (EUR/THB) exchange rate is trading at 35.8923; the Euro to Russian Ruble (EUR/RUB) exchange rate is trending in the region of 62.2800.
