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July currency review

As we saw recently with the Seychelles, Zambia's cost of living factors for international staff are also currently working together to potentially make big pay adjustments necessary. Both inflation and exchange rates are pushing indices strongly in the same direction - upwards for foreign staff in the country - whereas most of the time they tend to at least partially offset each other. Zambia has been a constant presence in our high-inflation tables since September 2019, when its official year-on-year consumer price index change went into double figures, and now the kwacha has suddenly become the world's strongest currency, at least during July (see first table). The 11% gain against the euro was driven by rising production and prices of the country's most vital export, copper. However, it should be noted that, over the last 12 months, the kwacha is still down against the euro by 6%, so any necessary cost of living adjustments will depend on timings of pay reviews. 

The Turkish lira was the only other currency to gain more than 2% against the euro in July. It also remains heavily down over the year, as our last table below shows.

Countries experiencing largest currency gains in July

Country

Currency code Movement v EUR
2 Jul - 2 Aug 2021 (%)
Inflation
(%)
Turkey TRY +3 19.0
Zambia ZMW +11 24.6

Having gained strongly in recent months, the Seychelles rupee was one of the weakest currencies in July (see next table), showing the wisdom of taking your time before adjusting assignee pay after a big cost of living factor change. Indeed, the examples of Zambia and the Seychelles prove once again the value of applying ECA's suggested cost of living adjustments consistently over time. Doing so captures every change to exchange rates and inflation throughout an international assignment, no matter how big or small, meaning staff are never out of pocket. 

The central bank of South Sudan continued to heavily devalue the pound in July, while our old friend the Venezuelan bolivar made further losses.

Countries experiencing largest currency losses in July

Country

Currency code Movement v EUR
2 Jul - 2 Aug 2021 (%)
Inflation
(%)
Haiti HTG -4 17.2
Seychelles SCR -5 11.3
South Sudan SSP -19 19.0
Venezuela VES -19 2719.5

Finally, here is this month's selected currency movements table:

Selected currency movements (v EUR)
Country Currency code % movement to 2 August 2021 v EUR since: Latest official annual inflation (%)
    2/7/21
(1 month)
3/5/21
(3 months)
1/2/21
(6 months)
3/8/20
(12 months)
 
Argentina ARS -1 -2 -9 -26 48.8
Australia AUD -2 -3 -2 +2 3.8
Brazil BRL -2 +6 +8 +1 8.3
Canada CAD -1 0 +5 +7 3.6
Chile CLP -3 -5 -1 0 3.8
China CNY 0 +2 +2 +7 1.1
Egypt EGP 0 +1 +2 +1 4.8
India INR 0 +1 0 0 6.3
Indonesia IDR 0 +2 -1 +1 1.3
Japan JPY +1 +1 -3 -5 0.2
Kenya KES -1 +1 +3 -1 6.3
Korea Republic KRW -2 -2 -1 +3 2.4
Mexico MXN 0 +3 +4 +10 5.9
Nigeria NGN 0 -6 -6 -7 18.3
Norway NOK -2 -5 0 +3 2.7
Philippines PHP -2 -2 -2 -2 4.2
Poland PLN -1 0 -1 -4 4.7
Russia RUB 0 +4 +6 +1 5.5
Singapore SGD -1 0 0 +1 2.4
South Africa ZAR -2 0 +6 +12 4.9
Sweden SEK 0 0 -1 +1 1.8
Switzerland CHF +2 +2 0 0 0.6
Turkey TRY +3 -1 -12 -19 17.5
United Kingdom GBP +1 +2 +4 +6 2.1
United States of America USD 0 +2 +2 0 5.0
Venezuela VES -19 -28 -54 -94 2719.5
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