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INVEST recently had the opportunity to speak with Mr Ashraf Laidi, Chief FX Strategist at CMC Markets about currency markets across the world. Here are excerpts from the interview.

The dollar seems to have built a bottom and it is doing much better year–to–date against the British Pound, the Canadian Dollar and the Japanese Yen. It is also off its lows against the Euro. There is this assumption that just because the dollar has been in a bear trend for the past 7 years, it now has to recover at least half of the 40 per cent that it lost. I don’t think it is really going to happen because a lot of the dynamics and fundamental weaknesses that pushed down the US dollar over the past 7 years are still intact in general. The British pound is likely to depreciate in value further against the dollar. As for Japan, the downside against the Yen has been largely played out. The Brazilian Rial and the Norwegian Kroner are going to continue to do very well as their countries are not only countries with are commodities–driven but also have solid economic fundamentals. Norway is the world’s third largest exporter of natural gas and crude oil and it also has one of the most active sovereign wealth funds in the world. Brazil, in addition to soy and wheat, also has sugar cane which is converted to ethanol and untapped oil resources. It’s only a matter of coming up with the capital to extract the oil. The Australian dollar still has solid fundamentals despite the impending economic slowdown due to its commodities–driven economy in a time where there is likely to be further upside in commodities. I think the Australian dollar is here to stay and the question is whether it will go to parity with the US dollar. There is an 80–90 per cent chance of the Australian dollar hitting parity with the US dollar at the end of the year if not the first quarter of next year. This is not a reflection of bad economic fundamentals in the US. It is just a broadening improvement in the fundamentals in Australia. The Australian dollar as a currency has been occupying a larger share of turnover in the foreign exchange market.