Exchange Rates Update.EURO-USD $ USD-JPY Falls

The Euro Declined against the US Dollar after US Treasury yields increased and it was reported that consumer confidence had increased in the US. The Euro-USD exchange rate declined by 0.1260 percent to USD $ 1.4228.The Thomson Reuters preliminary consumer sentiment index increased to 70 in May from its value of 69.8 in April. An increase in consumer confidence signals a boost in the demand of assets, hence strengthening the currency. Furthermore, Commerce Department reports to be released next week are expected to show an increase of 3.8 percent in US housing starts. Amidst signs of the US economy recovering in spite of the increase in the price of goods and services brought about by the Quantitative Easing Programs, the US Dollar receives a boost.

The USD-JPY exchange rate declined by 0.4077 percent to 80.6080 Yen. This surprising decrease, in spite of the increase in the consumer confidence in the US, was due to the Chinese Central Bank increasing the Reserve Requirement Ratio for banks in order to curb inflation. This move has incited fears that China is moving towards a period of economic slowdown. Hence, there has been a decline in the demand of Asian stocks and a subsequent increase in the demand of the Japanese Yen as a reserve currency.