Forex Blog: Currency Trading News & Analysis.

October 18th 2005

Currency traders assess impact of bird flu

The fear that avian flu will soon become a global pandemic intensified last week, amid reports of outbreak in Russia and Turkey. While the disease is still effectively a moot economic issue, economists and investors are already drawing up worst case scenarios. According to several prominent currency traders, global economic shocks usually hit developing economies (and their currencies) the hardest. Since most developing Asian nations, however, have effectively fixed their currencies to the USD, their currencies will be spared. In this case, the Australian Dollar and New Zealand Kiwi will likely depreciate upon a massive flu outbreak. These currencies are both highly correlated with trade and commodities, and any sign that the global economy is in trouble could send risk-averse investors running for the exits. Reuters reports:

Investors see the fortunes of the Australian and New Zealand dollars as sensitive to even slight changes in global economic growth as they are commodity-based currencies, whose economies are heavily reliant on international trade.

Read More: Some currency investors debate bird flu mutation

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© 2004 - 2023 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.