The global covid pandemic has mostly affected the global economy and currencies have fluctuated a lot. It has become for everyone to predict even the near future and investors were significantly cautious before starting any process. The volatile currency is an obstacle for many things, especially for trading with goods and services or even online. After the vaccination and positive developments of the process, the economy has started the recovery process and there are some currencies that are performing relatively well in comparison to other currencies. The article will review the currencies with top performance in 2021 that will have to see very important trends and characteristics of the current economic situation.
The rupee has improved as a result of increased inflows of foreign currency in the form of remittances and an improvement in the country’s financial condition as the world’s three largest lenders released funds to the country. Pakistan has secured $500 million from the IMF, $1.3 billion from the World Bank for various ventures, $300 million from the Asian Development Bank for a hydropower dam, and $2.5 billion in Eurobonds in the last week. After its opening level on January 1, 2021, the rupee has risen 4.09 percent to Rs153.55 against the US dollar throughout the day.
The demand for the domestic currency has risen, according to the Roshan Digital Accounts (RDAs), as more people send money to Pakistan via these accounts. As a result, foreign exchange reserves have increased, which is another currency stabilizer. The decrease in Hawala and Hundi is another cause contributing to the increased use of these official outlets by Pakistanis living abroad. This is attributed to limitations on air travel to GCC countries such as Saudi Arabia and the United Arab Emirates.
The lira began to depreciate in November 2020. It reached an all-time high of 8.5876 in November 2020 before gradually declining to 7.0488 on Friday, February 5, 2021. After November, foreign capital has flooded into the region, bolstering the currency. The federal reserve aims to introduce a robust and open monetary tightening.
Though central banks around the world have cut the cost of borrowing, Turkey has raised interest rates by 675 basis points in just three months. Analysts claim that it will take another three years for inflation to reach 5%, according to the central bank. Despite the unpopular rate in 2020, USD/TRY is considered to be the top-performing currency pairs in Forex market as in the short term, the US dollar has strengthened as economists expect monetary policy tightening in reaction to rising inflation. The Biden administration is set to propose a $1.9 trillion stimulus package. In the first week of February 2021, the dollar strengthened past 91.00, pushing the USD/TRY to the 7.04 mark.
According to Parul Mittal Sinha of Standard Chartered Plc, the Indian rupee, which was Asia’s best-performing currency in March, will revert to levels last seen during the pandemic’s worst days. The Indian rupee, which was Asia’s best-performing currency in March, will return to levels last seen during the pandemic’s worst times, according to Standard Chartered Plc’s Parul Mittal Sinha.
Expectations of an economic rebound, a rare current-account surplus, and huge foreign inflows have insulated the rupee from the effects of rising US yields this year, making it a surprise winner in Asia. It has outperformed the Chinese yuan, as well as the tech-dependent currencies of the Taiwan dollar and Korean won, which were all expected to rise as the global economy recovered. In March, the rupee gained about 0.1 percent to 73.3850 per dollar. Thanks to a 1.2 percent drop on Tuesday, it lost much of the month’s gains as state banks hurried to purchase dollars ahead of the fiscal year’s end. According to a Bloomberg poll, it is predicted to trade about 72.13 by the end of December.
Summing It Up
Finally, to sum up, not everyone expected that the currencies that were outlined above would have the best performance in 2021 due to their history. However, the covid pandemic has shown us that not even the USD is strong enough to stay strong against the global economic pandemic.
The developing countries appeared to be performing well as they were able to collect more international financial help that increases the number of dollars in the country. This is why we can say that now, they are performing way better than the currencies such as USD, EUR, GBP Scandinavian Krones, etc. however, it does not mean that it will continue to perform like that for the next several months, as the changes might happen really quickly.