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Commodities Briefing - Category | Currencies more

Here’s how China’s renminbi becomes a new international reserve currency

Posted on 22 May 2015 by VRS  |  Email |Print

By the end of this year, the International Monetary Fund will decide whether the Chinese renminbi will join the euro, the Japanese yen, the British pound, and the US dollar in the basket of currencies that determines the value of its international reserve asset, the Special Drawing Right (SDR). China is pushing hard for the renminbi’s inclusion. Should it be admitted?
The IMF created the SDR in 1969 to supplement existing reserve currencies, thereby providing the global financial system with additional liquidity. As it stands, the SDR’s role remains largely limited to IMF operations; its share in global financial markets and central banks’ international reserves is negligible………………………………………..Full Article: Source

Where Are Oil Prices and the Ruble Going Next?

Posted on 21 May 2015 by VRS  |  Email |Print

The strong rally in the oil price over the past four months has confounded most forecasters. Instead of continuing the late 2014 slide to test the 2009 low of $42 per barrel, the price of Brent came close to $45 on Jan. 13 before starting a steady climb, which brought it close to $68 late last week.
That price rally, which has been replicated in Russia’s Urals contract, is a big part of the reason why the ruble has rallied strongly since early February and why there is so much optimism that Russia’s economy has weathered the economic crisis relatively unscathed. It is also the main reason why the RDXUSD, the index of Russian equities traded on international bourses, is one of the best in the world so far in 2015 with a gain of 34 percent………………………………………..Full Article: Source

Here’s how ‘the cartel’ rigged the currency market

Posted on 21 May 2015 by VRS  |  Email |Print

Regulators around the globe fined banks nearly $6 billion on Wednesday for rigging in the currency market. In one particular chat room, referred to as the “cartel,” traders from Citigroup, J.P. Morgan, UBS, RBS and Barclays who specialized in trading the euro tried to game the market. But what, exactly, did they do?
The short version is that traders exchanged positions around the 4 p.m. “fix” — basically, the closing price — then manipulated the figure both upward and downward. Britain’s Financial Conduct Authority put together this video on the bank that faced the largest fine of $2.4 billion, Barclays………………………………………..Full Article: Source

Compromise floated on currency rules in U.S. Senate

Posted on 21 May 2015 by VRS  |  Email |Print

Senior U.S. senators on Wednesday urged colleagues to support a compromise on boosting rules against currency manipulation in trade legislation key to a Pacific trade pact. Republican Orrin Hatch and Democrat Ron Wyden, the senior members of the Senate Committee on Finance, offered a joint amendment to legislation creating a fast track for trade deals through Congress. The Senate is expected to vote on the bill this week.
The White House has said U.S. President Barack Obama would veto the bill if lawmakers back a proposed amendment to force sanctions against currency manipulators, which Treasury Secretary Jack Lew said was a poison pill for the 12-nation Trans-Pacific Partnership………………………………………..Full Article: Source

Commodities Rally Hit by Stronger Dollar

Posted on 20 May 2015 by VRS  |  Email |Print

Commodity prices tumbled on Tuesday, as a resurgent dollar and concerns about weakness in China’s economy pushed investors out of everything from crude oil to copper and corn. The S&P GSCI index, which tracks prices of 24 commodities, recorded its biggest one-day drop in more than a month and ended at its lowest since April 28.
Before that, commodities markets, led by a recent rebound in crude oil, staged a surprising two-month rally that had pushed the index to its highs for the year. Driving the gains was a faltering greenback, which many short-term investors took as a signal to scoop up raw materials………………………………………..Full Article: Source

Ruble Rebound Prompts Currency Purchases by Finance Ministry

Posted on 20 May 2015 by VRS  |  Email |Print

Russia’s Finance Ministry joined the central bank in buying foreign exchange to take advantage of this year’s ruble gains after earlier efforts to stem the world’s biggest currency rally fell flat.
The purchases, carried out for several weeks, will be used to cover this year’s budget expenditures denominated in foreign currency, including debt payments, Deputy Finance Minister Alexey Moiseev told reporters in Moscow on Tuesday. The transactions had no impact on the domestic currency market or the volume of foreign-exchange liquidity, according to the central bank………………………………………..Full Article: Source

Debate Over Currency Cheating Intensifies in Trade Talks

Posted on 20 May 2015 by VRS  |  Email |Print

Thirty-six years ago, Japan lowered import tariffs on foreign automobiles to zero, ostensibly opening the world’s fourth-largest auto market to full international competition. Yet United States automakers say 93 percent of the cars on Japan’s well-tended roads are still made in Japan by Japanese companies.
Consumers there simply prefer their country’s cars, Japan has said. Automakers in the United States, however, say something else has long been amiss: the systematic, intentional weakening of the yen by Japanese policy makers, which effectively raised the cost of all kinds of imports, autos included……………………………………….Full Article: Source

Asian currencies tripped up by global bond rout

Posted on 19 May 2015 by VRS  |  Email |Print

Just in time for the summer holidays, the price of an ice-cold Thai beer is tumbling. Over the past month, the baht has fallen 2.9 per cent against the US dollar and 7.9 per cent against the euro, making it the world’s worst performing currency. Last week it dropped as low as Bt33.7 per dollar, a level last seen during the financial crisis in 2009.
The rationale is that Thailand’s stuttering economy and low inflation could push the country’s central bank to follow its unexpected April rate cut with further policy easing. Fast-rising household debt and poor export demand have both dented activity, leading some economists to forecast growth below 3 per cent this year………………………………………..Full Article: Source

Poll: Which EM currency would you buy?

Posted on 19 May 2015 by VRS  |  Email |Print

Most emerging market currencies have staged a comeback in recent weeks, as the greenback weakened broadly after soft economic data fueled speculation that the U.S. Federal Reserve may leave interest rates lower for longer.
In early Asian trade, the U.S. dollar was fetching 2.5731 Turkish lira, as the Turkish currency strengthened to its highest level in four weeks, well off the greenback’s record of 2.7435 lira, touched on April 24………………………………………..Full Article: Source

Weak dollar boosts bullion

Posted on 18 May 2015 by VRS  |  Email |Print

Gold prices could move higher as the greenback remains under pressure. It was a spectacular week for the yellow metal. Global spot gold price witnessed a sharp 3 per cent rally in the past week, its biggest since January. It went on to close on a strong note above the psychological $1,200 per ounce mark at $1,224.
Among the other precious metals, silver price rallied 6.3 per cent to close at $17.5 per ounce and platinum was up 2.3 per cent and has closed at $1,168 per ounce………………………………………..Full Article: Source

How Much Should a Currency Be Worth? No One Really Knows

Posted on 18 May 2015 by VRS  |  Email |Print

As debate over Pacific trade deal intensifies, U.S. lawmakers find themselves entangled in calculus that even IMF and WTO haven’t been able to pin down. Legislation that targets currency manipulation might make or break U.S. President Barack Obama’s signature Pacific trade deal. But calling out offenders for currency transgressions is far from a clear-cut exercise.
U.S. lawmakers, companies and unions are trying to use pending trade legislation to strike back at countries they say subsidize their industries through devalued exchange rates. They’re finding themselves entangled in a decadeslong debate about currency valuations that has bedeviled leading institutions such as the International Monetary Fund and the World Trade Organization……………………………………….Full Article: Source

Digital currencies: A gold standard for bitcoin

Posted on 18 May 2015 by VRS  |  Email |Print

Bitcoin-like currencies backed by the yellow metal show promise for crisis-scarred libertarians. Anthem Blanchard grew up with gold. His father was such a dedicated goldbug that he flew a biplane towing a 50-foot sign declaring LEGALIZE GOLD! at President Richard Nixon’s second inauguration to promote the idea that ordinary Americans should be allowed to buy it.
The biplane was chased away by the US Secret Service, but James Blanchard III’s wish ultimately came true: in December 1974, Americans were allowed to buy the metal after a 40-year moratorium………………………………………..Full Article: Source

Russia Rebuilding Foreign Currency Reserves

Posted on 15 May 2015 by VRS  |  Email |Print

Russia’s central bank says it will buy $100 million to $200 million a day in the market to replenish its foreign currency reserves. The bank made the announcement on May 14 after Russia’s currency reserves slumped $120 billion in less than a year to its lowest level since at least 2008.
The reserves started falling in July 2014 as policy makers sought to prop up the ruble weighed down by U.S. and European sanctions over the Ukraine crisis. Last year, Russia spent almost $90 billion of its reserves before abandoning its managed exchange-rate policy in November as falling oil prices exacerbated the ruble’s retreat against the dollar…………………………………..Full Article: Source

Senate passes bill targeting currency manipulators

Posted on 15 May 2015 by VRS  |  Email |Print

The Senate took aim Thursday at what supporters call “egregious and prevalent” currency ma­nipu­la­tion by foreign countries. But economists say such ma­nipu­la­tion is no longer prevalent and that the longtime poster child of currency ma­nipu­la­tion — China — has gradually stopped doing it.
Nonetheless, most Senate Democrats and Republicans supported a bill that would punish countries — particularly China — that they say manipulate their currencies to make their exports cheaper and gain unfair trade advantages. The measure would force the Commerce Department to investigate allegations of ma­nipu­la­tion and determine offsetting import duties…………………………………..Full Article: Source

Currency-Hedged ETFs: Making the Case for U.S. Investors

Posted on 13 May 2015 by VRS  |  Email |Print

With international equities outperforming U.S. stocks year-to-date and for the past year, it’s no surprise that U.S. investors have poured $69 billion into international ETFs while pulling out about $30 billion from U.S. equity ETFs, according to the latest data from Credit Suisse.
But those investors run the risk of smaller relative returns or even possible losses if the currencies underlying those assets decline, which is very possible given the strength of the U.S. dollar. For international stocks, “the most important lesson of the last two and half years has been the impact of the currency on any equity investment,” says Dodd Kittsley, head of ETF Strategy and National Accounts at Deutsche Asset & Wealth Management. “Currencies have hit investors where it hurts the most — in returns.”……………………………………….Full Article: Source

Will China Join a Global Currency War?

Posted on 13 May 2015 by VRS  |  Email |Print

China is unlikely to engineer a competitive devaluation of the yuan as it seeks reserve currency status, according to Pacific Investment Management Co. A sharp drop in the currency would also hinder government efforts to transform Asia’s largest economy into one that’s driven more by consumption rather than exports, Isaac Meng, a portfolio manager at Pimco in Hong Kong, wrote in a research note released Wednesday.
People’s Bank of China officials have called on the International Monetary Fund to add the yuan to its basket of reserve currencies in a review later this year………………………………………..Full Article: Source

China Adopts IMF Accounting Practice in Reserve-Currency Push

Posted on 13 May 2015 by VRS  |  Email |Print

China adopted the International Monetary Fund’s standards for its latest balance of payments data as the nation seeks to obtain reserve-currency status for the yuan. The changes, effective this year, include putting reserve assets under the financial rather than the current account, according to a statement posted on the State Administration of Foreign Exchange website Tuesday.
With the adjustment, the country’s first-quarter current-account surplus of $78.9 billion is the same as the deficit under the financial and capital heads. The authority didn’t give a reason for the shift………………………………………..Full Article: Source

China’s Currency Trap

Posted on 12 May 2015 by VRS  |  Email |Print

China can’t join the currency war because it doesn’t want to devalue the yuan. China faces a currency conundrum. Exports are slumping and competitiveness is waning after its currency’s more than 10 percent rise in real trade-weighted terms in the past year. But unlike its rivals in Asia and Europe, China is refusing to join the currency war.
Here’s why: The first problem is capital flow. Money is leaving China as investors cool on the nation’s growth prospects and as they look for better returns elsewhere. Louis Kuijs, Royal Bank of Scotland’s chief China economist, reckons that China lost $300 billion in financial outflows in the six months through March. A weaker yuan would give more reason to head for the exit………………………………………..Full Article: Source

70 currency union breakups offer Greece hope

Posted on 12 May 2015 by VRS  |  Email |Print

The hardliners in Athens may have a point. History suggests Greece leaving the euro wouldn’t make catastrophe inevitable, suggests Adam Slater, lead economist at Oxford Economics Ltd. More than 70 countries and territories have quit currency unions since 1945 and yet only a small minority have then suffered large losses in output, he said in a recent study. Most of these, such as in the former Yugoslavia, can be explained by other shocks like civil war.
While Greece’s gross domestic product could still slump about 10 percent, the decline could be limited and the economy may have undetected advantages that allow a decent recovery………………………………………..Full Article: Source

Convertibility: A global view

Posted on 11 May 2015 by VRS  |  Email |Print

While most currencies across the world are convertible on the current account, many are still not convertible on the capital account. Given the risk with unrestricted capital movement, the International Monetary Fund, too, — which has been all for free capital mobility — agrees that some controls on international capital flows may be necessary.
Flighty capital: It’s not without reason that China, which has for long let known its intention of making the renminbi convertible on the capital account, is yet to do so. The renminbi, which is the world’s second-most globally-traded currency, is today fully convertible only for current account transactions………………………………………..Full Article: Source

Could China’s Renminbi Rival the Dollar as the Next Reserve Currency?

Posted on 11 May 2015 by VRS  |  Email |Print

China has made a request of the International Monetary Fund (IMF): It wants the IMF to recommend the Chinese renminbi as a reserve currency. Being a reserve-currency economy would give China easier and cheaper access to capital (something an indebted China is likely to cheer). But there are also drawbacks.
Reserve currencies tend to be in high demand, pushing up the value of their currency relative to where it would otherwise trade. This makes exports less competitive and imports more competitive. China is unlikely to welcome such an outcome. Whether or not the IMF says “yes”—and to what extent—has the potential to shift the global economy toward a duopoly with two dominant reserve currencies—the U.S. dollar and the Chinese renminbi………………………………………..Full Article: Source

Currencies languish at lifetime lows

Posted on 11 May 2015 by VRS  |  Email |Print

When will the US start hiking its interest rates? The answer to this question is keeping the global currency market in a jittery mood. The turbulence in the global currency market in 2013 following the US Federal Reserve announcing its plan to wind down quantitative easing, is well known. Many currencies, including the Indian rupee, tumbled to their all-time lows against the US dollar then.
While most currencies have since recovered from their lows a few are still hovering around their lifetime lows against the greenback. These include the Mexican and Argentine peso and the Turkish lira. The Mexican peso fell to its all-time low of 15.65 in March and is currently poised at 15.12 to the dollar. The previous record low was 15.57, seen in March 2009 following the US financial crisis. This time, the fall to a new record low is attributed to the meltdown in crude oil prices………………………………………..Full Article: Source

Greece could use ‘parallel currency’ as desperation grows

Posted on 08 May 2015 by VRS  |  Email |Print

European Central Bank board member floats the idea of an “IOU” system to pay civil servants if country runs out of euros. Greece could start using a “parallel currency” to pay its civil servants if it runs out of cash, one of the European Central Bank’s board members has suggested.
Highlighting the desperate situation faced by the country, Yves Merch, a member of the ECB’s executive board and governor of Luxembourg’s central bank, told Spanish newspaper La Vanguardia that Greece could resort to using “exceptional tools” to pay its obligations………………………………………..Full Article: Source

IMF calls on China to allow greater currency flexibility

Posted on 08 May 2015 by VRS  |  Email |Print

The International Monetary Fund (IMF) has said China should continue to provide “greater flexibility” in its exchange rate policy as the country continues to see slower growth. The IMF said the mainland should reduce foreign exchange intervention.
China’s currency is widely seen as undervalued and the country was accused for years of suppressing the yuan in order to boost exports. China says it is trying to manage the yuan’s value against other currencies. Analysts say that in reality it is still pegged to the dollar………………………………………..Full Article: Source

U.S. Currency Hawks: IMF’s Brighter Yuan Outlook Strengthens Case for Currency Sanctions in Trade Deal

Posted on 07 May 2015 by VRS  |  Email |Print

U.S. currency hawks, undismayed by the International Monetary Fund‘s brighter outlook on China’s exchange rate policy, say the fund’s new assessment on the yuan bolsters, not weakens, the case for currency sanctions in trade legislation. Federal lawmakers have long cited China as the chief target of legislation meant to punish trade partners seen to be using their exchange rates to gain a competitive advantage.
For more than a decade, the IMF’s assessment of the yuan as undervalued lent legitimacy to lawmakers and their constituents who complained that China’s currency policy came at the expense of American jobs, exports and growth………………………………………..Full Article: Source

Commodities, RBA, help prop up Australian dollar

Posted on 07 May 2015 by VRS  |  Email |Print

The Australian dollar is higher, helped by gains in commodity prices and expectations the Reserve Bank won’t be cutting the cash rate again. The dollar was worth US79.45 cents at noon (AEST), up from US78.69 cents yesterday.
The Aussie has pushed higher since the Reserve Bank yesterday cut the cash rate for the second time this year, but gave no indications it is looking to cut further. Data out today showed retail spending rose 0.3 per cent in March, slightly below expectations………………………………………..Full Article: Source

Fate of commodities is linked to dollar

Posted on 06 May 2015 by VRS  |  Email |Print

Amonth or so ago we highlighted a research note from Barclays that showed how investors were continuing to retreat from commodities. Long-term readers will not be surprised to learn that looks to have marked a turn of fortune for the sector. The Continuous Commodity Index is an equally weighted measure of 17 commodity futures, including energy, base metal and agricultural benchmarks, along with precious metals, too.
As such, it is a useful gauge of sentiment towards the broad asset class. The CCI hit a five-year low in March but has trundled higher of late, forming what chartists might consider a solid looking base………………………………………..Full Article: Source

A ‘Cash-Less Society’ = Bullion Confiscation

Posted on 06 May 2015 by VRS  |  Email |Print

As the corrupt regimes of the West move slowly but inexorably toward “banning cash”; it’s very important that bullion-holders understand the full implications of the latest, fascist moves by these regimes. Simply, “banning cash” = bullion confiscation.
If the Zombie-serfs of Western nations are no longer allowed to hold any of our debauched paper ‘money’, they certainly won’t be allowed to hold real money – i.e. gold or silver. However, even here there may be a means of escape, for those who plan for this (inevitable?) eventuality………………………………………..Full Article: Source

China knocks on door of reserve currency club

Posted on 06 May 2015 by VRS  |  Email |Print

The internationalisation of China’s renminbi faces its stiffest test yet as the International Monetary Fund debates whether to endorse the “redback” as a reserve currency alongside the dollar, euro, yen and sterling.
Becoming a constituent in the IMF’s Special Drawing Rights basket would be a big step forward for the currency, which remains tightly controlled by Beijing. Economist Louis Gave of GaveKal Dragonomics likens the move to Japan’s currency liberalisation in the 1980s and the subsequent run-up in yen assets………………………………………..Full Article: Source

Why IMF currency basket move would boost RMB

Posted on 06 May 2015 by VRS  |  Email |Print

This year the International Monetary Fund (IMF) will decide whether China’s renminbi (RMB) will join its Special Drawing Rights (SDR) basket of currencies. Asian market participants believe its inclusion is vital. The IMF determines the weightings of currencies in its SDR basket every five years. Later this year the IMF will consider adding the RMB to the basket, which includes four currencies: the euro, Japanese yen, pound sterling and US dollar.
While the SDR is rarely used in actual transactions - it makes up around only two percent of foreign exchange transactions – the move would be an automatic acknowledgement of reserve currency status. All central banks would hold RMB through their SDR assets………………………………………..Full Article: Source

‘World’s hardest-working currency’: Canadian dollar spikes again

Posted on 06 May 2015 by VRS  |  Email |Print

The Canadian dollar is bouncing higher again today, moving in a wide range to best the 83-cent mark. It’s largely because of a weaker U.S. currency, rather than anything to do with Canada, however.
The loonie touched a high of 83.31 cents U.S. today, and a low of 82.43 cents., hovering below the 83-cent mark by late afternoon. Greg Moore, senior currency strategist at RBC Dominion Securities, said the main driver of today’s bounce played the major role………………………………………..Full Article: Source

China’s currency is about to get a huge global endorsement

Posted on 05 May 2015 by VRS  |  Email |Print

Long pegged as a currency manipulator, China might be about to get a big stamp of foreign-exchange credibility. The International Monetary Fund is reportedly close to calling the Chinese yuan fairly valued. That’s something that hasn’t happened in more than a decade, and it would come despite opposition from the White House, according to the Wall Street Journal.
China’s foreign-exchange reserves are falling, a signal that it’s not intervening as much to keep its currency weak to bolster exports. Its holdings of US government debt are falling, too, which shows that whatever US dollar reserves it does have aren’t being parked in Treasury debt to the extent that they used to be. In fact, Japan recently has overtaken China as the leading foreign holder of US debt………………………………………..Full Article: Source

The dollar joins the currency wars

Posted on 05 May 2015 by VRS  |  Email |Print

In a world of weak domestic demand in many advanced economies and emerging markets, policy makers have been tempted to boost economic growth and employment by going for export-led growth. This requires a weak currency and conventional and unconventional monetary policies to bring about the required depreciation.
Since the beginning of the year, more than 20 central banks around the world have eased monetary policy, following the lead of the European Central Bank and the Bank of Japan. In the eurozone, countries on the periphery needed currency weakness reduce their external deficits and jump start growth………………………………………..Full Article: Source

IMF to Brighten View of China’s Yuan

Posted on 04 May 2015 by VRS  |  Email |Print

The International Monetary Fund is close to declaring China’s yuan fairly valued for the first time in more than a decade, a milestone in the country’s efforts to open its economy that would blunt U.S. criticism of Beijing’s currency policy.
The fund’s reassessment of the yuan—set to be made official in IMF reports on China’s economy due out in the coming months—follows years of IMF censure of Beijing’s management of the currency. The IMF’s latest view undermines the Obama administration’s pressure on China over its management of the currency and could undercut congressional efforts to inject yuan concerns into pending trade legislation………………………………………..Full Article: Source

IMF: South Sudan currency policy enables ‘hidden transfer of resources’

Posted on 04 May 2015 by VRS  |  Email |Print

The International Monetary Fund (IMF) says that the South Sudanese government has set an exchange rate between the dollar and the South Sudanese pound that is not “realistic,” alleging that the country’s currency policy results in a “hidden transfer of resources” to individuals with “privileged access.”
Last Friday the independent Indian Ocean Newsletter reported that an internal European Union memo had characterized South Sudan’s system of governance as ‘kleptocratic’ – a Greek term meaning “rule by theives.” The report added that the existing gap between the official exchange rate and the street rate “benefits a small number of privileged people close to the ruling circles.”……………………………………….Full Article: Source

Currency-Hedged ETFs Are 2015’s Hottest Trend

Posted on 30 April 2015 by VRS  |  Email |Print

Currency-hedged exchange-traded funds (ETFs) are perhaps the hottest trade in 2015. Since the beginning of the year, over $33 billion has flowed into these ETFs, which hold foreign equities but neutralize the foreign currency exposure.
The WisdomTree Europe Hedged Equity ETF (HEDJ), for instance, has experienced inflows of nearly $13 billion, the most of any ETF. And the Deutsche X-Trackers MSCI EAFE Hedged Equity ETF (DBEF) isn’t far behind with inflows of over $9 billion. Of course, the popularity of these funds has been driven by a strong U.S. dollar, which has gained over 20% in value against the euro over the past year………………………………………..Full Article: Source

Dollar Rally Is Over, Time To Rotate Into Multinationals, Commodities

Posted on 30 April 2015 by VRS  |  Email |Print

Goldman Sachs is wrong about the dollar, according to Cornerstone Macro in a report published on Monday. Cornerstone Macro is top ranked in macroeconomics research by Institutional Investors. The debate is always: What’s been driving the dollar? Goldman Sachs, for instance, believes foreign central banks’ monetary easing policies have been the catalysts that will push the U.S. dollar higher. See my April 23 blog “Goldman: The Dollar Rally Is Not Over“.
Cornerstone Macro’s Francois Trahan and team take a different view. “Our work suggests that the bulk of dollar strength [over the past several quarters] has been a function of a global growth slowdown,” wrote the analysts………………………………………..Full Article: Source

Yuan may get a second chance if it fails IMF currency basket review

Posted on 30 April 2015 by VRS  |  Email |Print

The International Monetary Fund (IMF) won’t rule out a possibility of holding a special review before 2020 to discuss the yuan’s eligibility to join its special drawing rights (SDR) basket if the currency fails to make it at a five-yearly review this year, an IMF official said.
The IMF’s 24-member executive board is due to meet informally next month before a formal review in autumn that will examine whether any currencies meet the criteria to be added to SDR, a type of monetary reserve currency created in 1969 which operates as a supplement to the existing reserves of a number of key economies around the world………………………………………..Full Article: Source

Hedge Funds Lead Shift In Dollar Sentiment

Posted on 29 April 2015 by VRS  |  Email |Print

Betting that the dollar will keep pushing higher against major currencies has lost its allure. Up until a few weeks ago positioning for a further climb of the dollar against the euro and the yen was the only game in town, but investors and traders’ are scaling back on the trade, according to the latest positioning data from the Commodities Futures Trading Commission, which measures a portion of the market that serves as a good proxy for the whole.
In fact, being long the dollar has been named as the most crowded trade for months in surveys of fund managers by Bank of America Merrill Lynch. But now the trade is losing steam………………………………………..Full Article: Source

How the Yuan Could Win Reserve Currency Status Even if the U.S. Objects

Posted on 29 April 2015 by VRS  |  Email |Print

Will the U.S. back China’s latest bid to make the yuan a global currency? It may not really matter. Washington’s veto-power at the International Monetary Fund may not apply when the executive board decides later this year whether to include the yuan in the elite basket of currencies that comprise the IMF’s emergency lending reserves.
China’s bid to get its currency included in the IMF’s Strategic Drawing Rights, or SDR, has recently gained support from key U.S. allies as Beijing increasingly flexes its muscle in the global economy………………………………………..Full Article: Source

History shows a currency breakup isn’t always a disaster

Posted on 29 April 2015 by VRS  |  Email |Print

Investors, economists and commentators have spent a lot of time agonizing over the prospect of a Greek exit from the euro, and not without justification. But the chart below from Adam Slater, lead economist at Oxford Economics, underscores the fact that currency breakups themselves are far from rare events and that, in most cases, the exit hasn’t been followed by a cataclysmic drop in output.
In fact, more than 70 countries and territories have exited currency unions since 1945, notes Slater. And he observes that when steep falls in output did occur, it was often the result of factors like civil war or a transition from a planned economy to a market economy………………………………………..Full Article: Source

Russian central bank opposes restrictions on using foreign currency

Posted on 28 April 2015 by VRS  |  Email |Print

Russia’s central bank said late on Monday that it opposed restrictions on using foreign currency in Russia. Russia’s Security Council earlier on Monday proposed measures aimed at reducing the use of foreign currency in Russia and boosting the use of the rouble in international settlements.
The Security Council gave few details about the measures it had proposed to limit the use of foreign currency in a brief statement on its website. The central bank responded by saying its position was that such restrictive measures were “inadvisable”………………………………………..Full Article: Source

China’s Currency Move Is Sign of Larger Struggle in Yuan

Posted on 28 April 2015 by VRS  |  Email |Print

Look no further than trading in the Chinese yuan if you want to see how challenging coming years are likely to be for China’s policy makers and the global economy. The yuan has risen against the dollar this year despite growing slack in the Chinese economy and the pain a strong currency inflicts on its export sector.
The gains reflect the scarce options facing Beijing as it shifts from an economic model centered on exports and subsidized investment to one where growth is fueled by consumer spending. Everyone—China, the U.S., the entire world—needs that transition to happen, but it won’t be easy………………………………………..Full Article: Source

How do you choose the right currency service?

Posted on 24 April 2015 by VRS  |  Email |Print

The bank is not the only way to move your money around the world - here are the strengths and weaknesses of three money exchange options. The currency exchange market has changed beyond recognition over the past decade. It has responded to the changes in the way we live today: business is transacted across borders, and currencies need to be exchanged 24 hours a day.
So you have more choice than ever before. There is the best-known route of the high street bank. More recent to the market are currency brokers and peer-to-peer exchange services. But how do you choose between them? Each has its strengths and weaknesses and will suit different situations and people. We’ve assessed all the types of service on offer and point out the pros and cons of each, particularly if you are moving large sums…………………………………..Full Article: Source

Swiss left helpless in currency wars as franc surges

Posted on 24 April 2015 by VRS  |  Email |Print

Switzerland is running out of ammunition to fight the global currency wars. In the three months since the Swiss National Bank scrapped the franc’s ceiling against the euro, it’s intervened in currency markets, cut interest rates and on Wednesday made more depositors subject to its negative rates. Yet the franc has still gained the most among its Group-of-10 peers this year, with traders positioned for further strength.
Ditching the cap has left the nation at the mercy of the European Central Bank’s unprecedented stimulus program, which is driving investment into franc assets. Those gains are starting to hurt, with consumer prices tumbling and Swiss stocks lagging behind their European counterparts…………………………………..Full Article: Source

Currency Manipulation: Yet Another Red Herring in the Trade Debate

Posted on 23 April 2015 by VRS  |  Email |Print

The issue – or non-issue – de jour among parties to the free trade debate is currency manipulation by America’s potential trading partners. The U.S. auto industry and its defenders in Congress claim that Japan and some of the other countries negotiating the Trans-Pacific Partnership, or TPP, have a history of devaluing their currencies to the detriment of U.S. exports.
They say U.S. negotiators should insist on inserting punitive language into the TPP text to allow the United States to retaliate against currency manipulation. Senators Rob Portman, R-Ohio, and Debbie Stabenow, D-Mich., introduced legislation today to require that very thing. They represent the two largest auto-producing states……………………………………Full Article: Source

Currency Swings Worry Treasurers in Asia

Posted on 22 April 2015 by VRS  |  Email |Print

The biggest worry for treasurers of Asian companies this year? Currency markets. That’s according to a J.P. Morgan survey that found 40% of treasurers in the region said foreign exchange was their primary concern as they worry that big currency swings could hit global growth over the next year.
Uncertainty around when the U.S. Federal Reserve will raise interest rates, combined with an appreciating dollar, “is creating headwinds for businesses who are significantly exposed to Asian currencies,” said Dianne Challenor, head of treasury services for Asia Pacific at J.P. Morgan, “Margins are being squeezed and hedging strategies are challenging to get right, adding complexity to risk management planning.”………………………………….Full Article: Source

$100s closing in on $1s for most common currency

Posted on 22 April 2015 by VRS  |  Email |Print

Washington and Jackson may be lining your pockets, but Benjamin’s been making a run for the border. One-dollar bills and hundreds make up the vast majority of U.S. currency, according to the 2015 World Almanac. There are 10.7 billion ones in circulation, and 9.7 billion hundreds.
Twenty years ago, hundreds made up only 14 percent of the bills in circulation, now they’re more than a quarter. The other common denominations have all dropped in frequency, except twos which still make up 3 percent of bills…………………………………..Full Article: Source

A single Asian currency?

Posted on 20 April 2015 by VRS  |  Email |Print

A list of 57 countries including Australia have been finalised as founding members of a new multi-billion dollar investment bank being led by China this week. Economist Clifford Bennett says the AIIB could deliver a single currency for Asia, like the Euro, in 15 years time.
“We could have a currency in Asia in 15 to 20 years time which is a kin to the Euro for Europe,” he said. “A lot of people criticise the Euro but it has sustained and survived a major crisis and threat and if we had that scentario in Asia we could be selling our iron ore and copper to China without any upward appreciation on the currency at all and we’d have a far more balanced economy then.”…………………………………..Full Article: Source

China wants to follow rules on currency basket - IMF official

Posted on 20 April 2015 by VRS  |  Email |Print

China does not want to bend the rules in its favour to include the yuan in the IMF’s basket of major reserve currencies, the No. 2 official at the International Monetary Fund said. Beijing tightly controls the yuan’s movements and has strong capital controls, but it is pushing for increased use of the currency for trade and investment as part of a long-term strategic goal to reduce dependence on the dollar and to raise its global economic clout.
That push has centred on the Special Drawing Rights, a basket that now contains dollars, yen, pounds and euros and serves as the IMF’s main unit of account……………………………………Full Article: Source

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