If you remember, last month was all about the uncertainty that we are all feeling with regards to interest rates, the economy and the lack of strength that was evident with a lot of currencies, not least the US dollar.
So what did May have to offer us? Did the news get any better? Were the currencies and exchange rates still very unstable or did things start to level out a bit?
An overview of the currency markets during May
If you look at the headlines on various sites during the month of May, you'll notice that words like 'deteriorate', 'weaker', 'inflation' and 'interest rates' appear time and time again.
What's more there was no particular country that these words were used in conjunction with – it seems like pretty much every country in the world is going through its woes at the moment, and these concerns certainly showed up in the currency markets and in the exchange rates as well.
Take the British pound for example. On the first of May one British pound would have bought you $1.9667 US dollars. The very next day it was up to $1.9843 dollars. Not a bad deal with just a day between the dates.
Things looked good for a few days and then we saw rather a lot of fluctuations going on. It certainly seemed like that instability we saw in April was well and truly settled in for the month of May as well. On the sixth your pound got you $1.9703 dollars, and yet just three days later we were down to $1.9473 dollars. This was going to be a wild ride – and probably not the best time to start dabbling in the foreign exchange market.
The exchange rate stayed at around $1.94 dollars for all but a single day until the nineteenth, when it started pushing upwards again. It even managed to reach the heady heights of $1.9841 at one point, before dipping back down slightly and finishing the month on a reasonably respectable $1.9730.
Whew. What a journey that was. But this wasn't the only currency pairing to do some tussling during May. The mighty Euro had something of a scrap against the Japanese yen as well, and this kicked off on the ninth of May as well.
On the first, your single Euro would have got you 162.62 yen, and while the exchange rate dipped a little in the first week of the month, it held relatively steady until the eighth, when it dropped from 162.55 yen to 160.15 yen. That's when a similar pattern to the woes of the pound kicked in, and the Euro/Yen pairing went into the weekend with the Euro equal to just 158.81 yen – a far cry from where it had been just nine days previously.
Things started looking up again on the twelfth though, when it reached a more respectable 160.42 yen. Two days later it was back up to 162.48 yen, and it was almost as if that little blip hadn't happened. What's more it managed to keep the pressure on for the rest of the month, even peaking at 164.07 yen on the twenty eighth.
A turbulent month indeed, and these weren't the only currencies to struggle around the middle of the month. The good news was that things seemed back to whatever kind of normality is passing for normal in the currency markets at the moment by the time the month ended.
It was an interesting month to be sure. But which currencies will come out on top next month? Judging by May's evidence, it looks as if the US dollar may be doing a little better, while the British pound is losing some momentum, due mainly to falling house prices and the ever increasing doubt that we could fend off a recession.
Where will we be this time next month?
Notable events in the world of currency in May 2008
How is that recession coming along?
Last month we saw that there was a lot of uncertainty concerning the possibility of a global recession. Those countries worst affected and seeming to struggle the most to fend it off – perhaps most notably the US and the UK – understandably saw their currencies struggling on the world stage as well, as other stronger currencies jumped up and took advantage of a good situation (for them anyway).
But May saw the US turn something of a corner. It remains to see whether the new road it seems to be on will lead back in the same direction again, or whether it really is a good sign of good things to come. America certainly seemed buoyed up by the race for the Presidency, as Clinton and Obama went head to head for the chance to snag the nomination.
While the dollar struggled in April, May was the turn of the pound as all the financial data coming from the UK's direction seemed to get worse and worse. The US was positively buoyant by comparison.
Long may it continue? Well, until next month, anyway.
A weaker economy in New Zealand
While New Zealand isn't the only country in the world to be struggling against that possibility of a global recession, it did experience harder times during May.
Most notable was the fact that the New Zealand dollar struggled against most of the major currencies towards the middle of the month (again, this particular news story broke on the ninth – it seems as if the ninth of May was a day when we all should have stayed in bed for once).
The economy in New Zealand was experiencing the same problems as many other economies around the world; in fact it almost looked like the only currency it really stood up well against was the British pound, but given the fact that the pound and the country using it were going through a raft of problems of their own, that isn't too much to brag about.
It was no surprise that when New Zealand released its own economic data in the middle of the month, there was nothing much to celebrate. It will be interesting to see how the country fares over the next few months.
The ups and downs of the Asian currency markets
One minute they were up, and the next they were down. A more buoyant US dollar added to the confidence of the Asian markets and they seemed to feel the effect.
The twenty third of May was marked by a fall in those currencies again though, leaving the South Korean won struggling, the Singapore dollar also falling against the US dollar – which seemed to have a little renewed strength this month – and the Malaysian ringgit also experiencing a fall.
The Japanese yen also experienced the flip side of a stronger US dollar on the twenty ninth of May. Not exactly a good month for the Asian currency markets, but perhaps June will bring slightly better news.
Are things looking up for the US dollar?
It seems as if May was a far cry from April as far as the US dollar was concerned. While America is not out of the woods yet as far as the economy, the threat of some kind of recession (mild or severe, who can tell?), and interest rates are concerned, the US dollar certainly did better in May than it did the previous month.
As we saw above, it regained some of its old magic by putting the Asian markets through their paces and coming out on top most of the time. Even some of those currencies which didn't experience such a tussle with the dollar ended the month worse off than they started.
A case in point was the Hong Kong dollar. It started off at 7.7945 against the US dollar, and as the month wore on the US dollar gradually increased its strength against it, coming out on top as far as the exchange rate was concerned, as it finished at 7.8055.
Not much of a change on the face of it, but it is just another small piece of evidence to confirm that May wasn't such a bad month for the US dollar. And certainly not when you compare it to April.
The Slovak koruna cashes in on news that it is converting to the Euro
This was a story that occurred later on in the month that really displayed the fact that currencies can be unpredictable and amazing at times.
Slovakia will be ditching its own currency, the koruna, in 2009 so that it can start using the Euro instead. This was obviously deemed to be a good move for those running the country, but the ironic thing was that as soon as the news broke that this would be happening, the outgoing koruna suddenly gained in value.
The country got the good news about being accepted into the new currency on the seventh of May, and its existing currency has soared since then, finishing the month some six per cent higher than it started it.
There's obviously nothing quite like getting rid of your own currency to make it increase in value.
Looking ahead
May was yet another turbulent month as far as the currency markets were concerned. While some currencies did better than others, some finished the month off rather bruised and battered.
It was interesting to watch developments in the economies and currency markets around the world as they happened, because in some ways they seemed the same as they did in April, and in other ways they were completely different. Offering a little hope, perhaps, for brighter times to come?
That may sound like an odd statement, but in truth once you look into matters a little more closely it isn't such a strange thing to say. There is still undoubtedly the threat of a recession in certain quarters, but talk of a global recession seems to have abated somewhat during May.
In April we talked about how America was struggling to get from day to day without getting weaker than it already was as far as its currency, economy and rate of inflation were concerned. But May saw a picture that in general seemed a little better than the month before. Not good, perhaps, but slightly better.
There can be no doubt that May was the month when Britain really started to feel the strain. The pound didn't really feel particularly strong at any point during the past few weeks; in fact it rather took on the appearance of an athlete who was severely injured and just trying to get to the finish line, no matter what condition it was in when it got there.
Although the pound did manage to squeeze in a small victory right at the very end of the month, with a few days of rises against the Euro to give it at least something to be proud of.
We are certainly not out of the woods yet as far as the economy is concerned, but while the prospect of interest rates around the world being lowered does not look like it is on the cards in the near future, a lot of people would probably be prepared to take the small victory of knowing that at least they hadn't gone up.
Of course it all depends on what country you are in and what currency is the one of choice. If you were living in Slovenia you would have been treated to a fall in inflation during May, although the overall rate is still high. It remains to be seen where that goes in future months, although the central bank of that country reckons it will fall way below six per cent in the months to come.
Those who are interested in the fate of the US dollar will probably be giving a sigh of relief compared to what was going on last month, but will they be doing the same come the end of June?
We'll see you back here next month to find out.