Money Exchange Rates Today - Hurricane Sandy Pushes Safe Haven Buying

The effects of Hurricane Sandy are been felt in the worldwide financial markets with trading volumes sharply down as the New York exchange will remain closed at least until tomorrow and safe haven demand on the increase.

Hurricane Sandy produced 85 mile-per-hour winds in and a 13 ft tidal wave that tore into New York, paralysing capital markets, with parts of lower Manhattan, where the financial district is concentrated partially under water.

The pound fell against the majority of the 16 most actively traded currencies yesterday after strong end to last week after the publication of better than expected UK GDP data for the three months to September.

Yesterday, the markets took note of a wide ranging newspaper interview by the Bank of England´s Chief Economist, Spencer Dale who warned earlier today that the pace of economic growth will be “materially” lower in the final quarter and that the UK will remain trapped in a period of sluggish expansion for some time to come. Dale also stated that in his opinion, inflation is likely to accelerate back towards 2.5% in the next few months because of the recent increases in energy prices, further damaging household incomes and spending power.

Dale also raised concerns about the recent gains by the pound, saying that they were “not good for us in terms of keeping this sort of rebalancing of the economy [towards exports] (…) I think it is something we are keeping a close eye on (…) If the exchange rate shifted up very dramatically, other things being equal you would have to take that into account in terms of policy.”

This follows ‘hot on the wheels’ of a speech by Bank of England Governor Mervyn King last week which was notable in its pessimistic outlook for the UK economy.

Overnight, the Bank of Japan took the rare step of easing monetary policy for a second month in a row by adding to its asset purchasing program by 11 trillion Yen taking the total spend up to 91 trillion Yen and kept Japanese interest rates at zero.

Money transfers to America:-

The economic effects of Hurricane Sandy will be long felt as lower Manhattan in New York is partially flooded with upwards of 50 million people affected by the storm and its aftermath. The economic side effects will take some time to overcome and quantify but predictability, the dollar improved against all its major trading partners on the back of safe haven demand. With the US elections only one week away, some analysts are predicting that the US dollar will continue to strengthen.

With the petro-refinery capacity of the US north east also effected, oil prices will probably rise and this should also strengthen the Canadian dollar.

Clients looking to buy either the American or Canadian dollar may wish to consider adopting a ‘sooner rather than later’ policy in order to protect against further potential falls in the value of the exchange rate.