As the global economic crisis significantly affected the economics of almost all countries, it has been extremely reflected in the forex market too. Moreover, the forex market is based on major currencies of the developed countries, which are more subject to the economic recession. Since the roles of various countries in the global economics are utterly different, the directions of change in the currency values are different. This leads to significant split in the currency values, which is identical to severe changes in the forex instruments.
According to the value and direction of changes, some currency pairs (forex instruments) have been incredibly affected to hit the record low in long periods of time.
It should be emphasized that the daily changes in the forex market is rarely higher than 1%, because it is related to the solid economics of the developed countries; and it is no normally comparable with the stock market, as a personal event in a company may result to significant changes in a single day.
GBP/JPY
Japanese Yen was one of the most affected currencies in the forex market during the global economic crisis, as the Japan economics is highly dependent on the US economics, which was the heart of the present global economic crisis.
In general, GBP/JPY was decreased 40.53% during the year 2008. The fall of GBP/JPY was indeed started from July 2007, when it reached its record high of 251.07 (since 1990), which was significantly higher than the highest value later recorded in 2008 (i.e. 213.94 on the first trading day of 2008).
GBP/JPY reached the value of 129.84 in December 2008, which was a record low in the past two decades; though this decreases was continued to reach the value of 118.80 in January 2009 as an incredible record low, indicating more than half decrease of GBP/JPY during just one year and half.
AUD/JPY and NZD/JPY
Another falling currency was the Aussie dollar (though it was also the case for Kiwi, the New Zealand dollar). AUD/JPY reached the value of 104.47 in July 2008, which was close to the record high of 107.72 in July 2007. A sudden fall of AUD/JPY led to a record low of 55.07 in October 2008. In other words, AUD/JPY lost about 50% of its value just during 3 months, which is indeed an incredible event in the forex market. In general, AUD/JPY had a 33.51% decrease during the year 2008.
The Aussie dollar incredibly fell to hit a record low against the Japanese Yen over two decades.
GBP/AUD
In addition to the sudden drop of almost all currencies against JPY, there were also severe instabilities in the entire market. For instance, the falling GBP was still high against the AUD, due to the incredible drop of AUD. Although a sudden change occurred in a short period (2 months), no previous record was touched.
GBP/USD
The changes of GBP and USD in opposite directions during the 2008 economic recession made the most incredible behavior of the forex market. The British pound fell and rose against the US dollar to hit both the record high and low over the past two decades. More accurately, GBP/USD rose to a record high of 2.0894 in November 2007, and then fell to a record low of 1.3503 in January 2009. The previous record high and low were 2.0110 and 1.3681 recorded in September 1992 and June 2001, respectively.
2008 Forex Market
In addition to the extremely sudden changes in the forex market, the break of various psychological limits made the market jittery, as no stability was achieved even during the first quarter of 2009.
These were just few examples of most extreme changes in the forex market occurred during the global economic crisis of 2008. In conclusion, all currencies were decreased against the US dollar and Japanese Yen; while USD itself was significantly dropped against JPY. In addition to the market instability led to numerous strong oscillations, deep splits were also appeared between similar currencies, which were usually considered as twin currencies such as AUD/NZD, EUR/GBP, etc.
Join the Conversation