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Commodities Briefing - Category | Currencies more

Euro currency calm counters Greece fears

Posted on 30 June 2015 by VRS  |  Email |Print

Queues at cash machines, emergency bank holidays, introduction of capital controls and a hastily convened referendum — a cocktail of events that would normally be guaranteed to induce market heatstroke. And yet the way the euro reacted to these seemingly seismic events in Greece on Monday suggested the market was displaying a rare outbreak of cool maturity.
True, the start of the Asian trading session saw the euro drop 1.5 per cent against the dollar and much more against the yen. But when the European markets awoke, the euro was repairing much of those losses and that trend extended into the New York trading day, surprising plenty who had expected a lot more volatility from a market renowned for explosive reactions………………………………………..Full Article: Source

Swiss Sell Francs to Stabilize Currency After Greek Flare-Up

Posted on 30 June 2015 by VRS  |  Email |Print

Swiss National Bank President Thomas Jordan said the central bank intervened to stabilize the franc, which surged after Greek Prime Minister Alexis Tsipras called a referendum on bailout terms. “Yesterday and overnight there was an increased demand for francs,” Jordan told a conference of Swiss executives in Bern on Monday. “The euro was under selling pressure and the SNB intervened in the market.”
Tsipras’s decision to call what is effectively a public vote on Greece’s euro-area membership is also a blow for Switzerland, where the currency’s appreciation is pushing the economy toward a recession………………………………………..Full Article: Source

Currency brokers tighten trading rules on Greek fears

Posted on 29 June 2015 by VRS  |  Email |Print

Online currency trading platforms braced on Sunday for extreme market moves due to events around Greece, imposing higher margins on much trading of the euro and in some cases preventing traders taking up new speculative positions. Retail platforms FXPro, Mayzus, Alpari and U.S.-based FXCM were among those tweaking the terms of trade in a market that in theory trades all day every day but should only see volumes rise when Asian investors and traders return to their desks on Sunday evening.
“Depending on the severity of market conditions come Sunday night/Monday morning, we reserve the right to limit EUR trading to the closing of existing positions only,” FXPro said in a statement on its website on Saturday evening………………………………………..Full Article: Source

If Greece leaves the euro

Posted on 29 June 2015 by VRS  |  Email |Print

What happens once a country leaves the euro? On financial markets a new currency first needs a new currency code that can be identified by computers for trading and payments. They are issued by the Swiss-based International Standards Organisation, a worldwide federation of national standards.
It provides an alphabetic three-character code, with the first two letters representing the country and the third the name of the currency. In Greece’s case it could not go back to its old code for drachma, GRD, because there are still some outstanding payments to be made. It would require a new code, most likely GRN………………………………………..Full Article: Source

Price War Rages in Currency-Hedged ETFs; ProShares Fires Salvo

Posted on 26 June 2015 by VRS  |  Email |Print

A price war is raging in the white-hot market for currency-hedged exchange-traded funds. ProShares, an ETF company best known for fast-moving leveraged products, unveiled its iterations of currency-hedged European and Japanese stock ETFs on Thursday. They appear boast lowest management fees on the market. So far.
The ProShares Hedged FTSE Europe ETF (HGEU) sports an 0.27% in annual expenses, while the ProShares Hedged FTSE Japan ETF (HGJP) cost s 0.23%. ProShares reckons that the asset-weighted average expense ratio for currency-hedged European stock ETFs was 0.56%; it’s 0.48% for currency-hedged Japan ETFs was 0.48%………………………………………..Full Article: Source

India’s RBI extends deadline to exchange pre-2005 currency notes

Posted on 26 June 2015 by VRS  |  Email |Print

Reserve Bank of India on Thursday extended the deadline for exchanging pre-2005 currency notes of various denominations, including of Rs 500 and Rs 1,000, by six months till December 31, 2015. The earlier deadline was expiring on June 30. “The Reserve Bank of India has extended the date for the public to exchange their pre-2005 banknotes till December 31, 2015,” it said in a press release.
RBI had, in December 2014, set the last date for public to exchange these notes as June end. It is easy to identify pre-2005 notes. The currency notes issued before 2005 do not have the year of printing on the reverse side. In notes issued post 2005, the year of printing is visible at the bottom on the reverse………………………………………..Full Article: Source

Israel Shekel World’s Worst Currency After Central Bank Buys

Posted on 26 June 2015 by VRS  |  Email |Print

The shekel depreciated the most among a basket of global peers, after the Bank of Israel intervened to beat back the currency’s best three-day rally since March. Israel’s currency weakened 0.8 percent, more than 30 other major currencies tracked by Bloomberg, to 3.7754 per dollar at 5:30 p.m. in Tel Aviv.
The Bank of Israel bought about $200 million after the shekel appreciated 2.1 percent in the three days through Wednesday. “It’s the Bank of Israel against the market,” Yariv Shalev, a currency dealer at Mercantile Discount Bank in Tel Aviv, said by phone………………………………………..Full Article: Source

Islamic State’s New Currency Is Monkey Nuts

Posted on 25 June 2015 by VRS  |  Email |Print

The so-called Islamic State is to issue its own currency. Crikey! The truth, though, is that the whole story is monkey nuts. The death cult is planning to release an “Islamic Dinar” in gold, apparently worth $140 (£90), with smaller denominations of silver and copper. They’ll be worth only their weight in the metal they are made from.
The “Caliphate” has pretensions to statehood and so running off coins and stamping them with Koranic verses helps shore up that image. The plan for an official currency was announced last November to allow IS to “emancipate itself from the satanic global economic system”………………………………………..Full Article: Source

Isis claims to mint gold and silver coins for currency free from ’satanic’ global economy

Posted on 25 June 2015 by VRS  |  Email |Print

Isis claims it is ready to start issuing its own currency in the form of gold and silver coins for use in its “caliphate”. Supporters of the so-called Islamic State have released pictures of what they said were new gold dinars on social media, amid a propaganda drive by the group as it approaches its one-year anniversary.
Abu Ibrahim Raqqawi, an anti-Isis activist who reports on events in the extremists’ Syrian stronghold for his website Raqqa Is Being Slaughtered Silently, shared photos of one and five dinar coins. “Isis say soon they will deal with the new coins,” he wrote on Twitter………………………………………..Full Article: Source

China Agrees to Limit Currency Interventions, Jacob Lew Says

Posted on 25 June 2015 by VRS  |  Email |Print

China has committed to limiting its currency interventions to moves countering damaging swings in exchange rates, U.S. Treasury Secretary Jacob Lew said Wednesday after high-level talks with top officials visiting from Beijing.
The commitment, agreed upon in the annual round of U.S.-China Strategic and Economic Dialogue negotiations, narrows the conditions under which China says it would be willing to manage the value of the yuan………………………………………..Full Article: Source

Are currency-hedged ETFs the right choice?

Posted on 24 June 2015 by VRS  |  Email |Print

Recent volatility in currency markets has awakened investors to the negative effect currency movements can have on asset returns, but is this a call for wider adoption of currency-hedged strategies or simply short-term noise which should be ignored by long-term investors?
Divergent central bank policies have driven significant currency swings in recent years. Unhedged equity returns have been eroded by moves like the Japanese yen falling 33.6% against the euro between July 2012 and December 2013 and the euro falling 22.1% against the US dollar between March 2014 and March 2015. Consequently, inflows into currency-hedged international equity ETFs have surged in 2015………………………………………..Full Article: Source

Currency Markets Check Plumbing on Potential Greek Spasm

Posted on 24 June 2015 by VRS  |  Email |Print

The operator of a key piece of the foreign-exchange market’s financial plumbing says it’s readying its systems for potential spasms in trading if Greece leaves the euro. “It makes sense to prepare your systems for all eventualities,” said Dino Kos, the head of global regulatory affairs at CLS Group Holdings AG. “We are certainly doing so at CLS.”
CLS settles more than $5 trillion of currency transactions every day. It was established in 2002 to eliminate the risk that a party to a currency trade would fail to deliver an asset after the transaction had been executed. U.S. regulators have designated it a Systemically Important Financial Market Utility whose failure could threaten market stability………………………………………..Full Article: Source

The U.S. Needs to Recognize China’s Currency Aspirations in the Latest IMF Review

Posted on 24 June 2015 by VRS  |  Email |Print

There’s an important opportunity this year to rework the global currency system, and the U.S. must make sure it takes part in the related discussions. Ousmène Mandeng, a senior fellow at the Reinventing Bretton Woods Committee, lays out this opportunity in a recent article in the Financial Times.
Here’s what’s happening. This year the International Monetary Fund this year is reviewing special drawing rights, which are foreign exchange reserves held by the IMF. Their value is based on a basket of four currencies: the dollar, the pound, the euro and the yen. As Mandeng points out, countries can exchange SDRs for usable currencies to supplement their international reserve holdings………………………………………..Full Article: Source

Currency-Hedged ETF Magic: A Less-Known Benefit

Posted on 23 June 2015 by VRS  |  Email |Print

The jury’s out on currency-hedged international ETFs. They won admirers by hauling in outsize profits this past year as stimulus measures drove down the euro and yen vs. the dollar, which hurt nonhedged portfolios. Now it’s the skeptics’ turn.
The greenback’s movements are cyclical, they say, and its rally may already be starting to lose steam. Morningstar analyst Patricia Oey recently analyzed the U.S. dollar’s performance over the past 40 years and its impact on portfolios. She found hedging currency risk provided little real long-term benefit………………………………………..Full Article: Source

Funds pinch their nose and buy euros

Posted on 23 June 2015 by VRS  |  Email |Print

The notion that funds have been buying euros every time the Greek crisis deteriorates sounds daft. But the latest run of data covering funds’ activity does seem to bear it out. This will make any reaction to a Greek deal if (big if) we get one tough to call. As we’ve noted recently, the euro has held remarkably firm even while the Greek crisis has run right to the wire with few signs of progress or even good will, writes Katie Martin.
Bets against the euro have clearly been shrinking. Take a look at the dollar positioning chart below from ANZ. It covers positioning data from the Commodity Futures Trading Commission. This represents a tiny slice of the currencies market as a whole, but it’s a pretty good proxy for funds’ activity………………………………………..Full Article: Source

Time to transform the world’s currency system

Posted on 23 June 2015 by VRS  |  Email |Print

The IMF should expand special drawing rights inclusion beyond the renminbi.T he pending International Monetary Fund review of special drawing rights is much more than a rejigging of a currency basket, or a decision on whether or not the Chinese renminbi will be included. It is about whether the IMF is willing to take serious steps towards the transformation of the international monetary system.
It will matter greatly for the interplay of currencies and for financial markets. The SDR is an international reserve asset and it gives countries the right to exchange SDRs for freely usable currencies to supplement their international reserve holdings. The SDR is denominated as a basket of four currencies, the dollar, euro, pound and yen………………………………………..Full Article: Source

India: Only 10 days left to exchange your pre-2005 currency notes

Posted on 22 June 2015 by VRS  |  Email |Print

Only 10 days are left to exchange pre-2005 currency notes, including those of Rs 500 and Rs 1,000 denominations, at banks as the deadline to do so is ending on June 30. Seeking cooperation for withdrawing pre-2005 currency notes from circulation, the RBI has asked the public to deposit the old design notes in their bank accounts or exchange them at a bank branch convenient to them.
The earlier deadline was January 1, but later the Reserve Bank of India had extended it till the end of this month. All pre-2005 notes continue to remain a legal tender. These notes can be exchanged for their full value at bank branches. It is easy to identify pre-2005 notes. The currency notes issued before 2005 do not have the year of printing on the reverse side. In notes issued post 2005, the year of printing is visible at the bottom on the reverse………………………………………..Full Article: Source

Euro Resilient Amid Greek Crisis

Posted on 19 June 2015 by VRS  |  Email |Print

Greece’s debt negotiations have taken a heavy toll on stocks and bonds in Europe, but the euro is on the rise. Many currency investors expect the euro to slump if Greece fails to reach an agreement with its creditors and leaves the currency area. But they are reluctant to make trades based on the outcome of unpredictable political negotiations.
Instead, fund managers are focusing on the volatility in financial markets caused by the Greek uncertainty, which is prompting them to scale back bets that the euro will fall, in an effort to protect their portfolios from risk. Given the popularity of wagers against the euro—often for reasons unconnected to Greece—this trimming of positions has resulted in a wave of buying that has propped up the currency………………………………………..Full Article: Source

The changing faces of U.S. currency

Posted on 19 June 2015 by VRS  |  Email |Print

The United States Treasury announced plans Wednesday to put a woman on the $10 bill. The change, which will happen in 2020, is notable not just because a woman will be on paper currency but also because the faces of U.S. money have been relatively stable.
“Portraits do not change often,” according to Casey Hernandez, a spokeswoman for the Treasury Department. U.S. currency as we know it today really began in 1913 when the Federal Reserve Act established the Federal Reserve as the nation’s central bank. In 1914, the reserve began issuing new bills called Federal Reserve notes — the same money we use today………………………………………..Full Article: Source

The curse of being a safe haven currency

Posted on 18 June 2015 by VRS  |  Email |Print

It’s tough being a low-yielding safe haven currency. In good times, nobody wants you and you are used for carry trades. In bad times, you’re highly sought after and your value seems completely decoupled from your economy.
Such is the fate of the Swiss franc. The Swiss National Bank must feel like it’s Groundhog Day. Four years ago, as the Greek crisis heated up and everyone feared an imminent break-up of the euro zone, the SNB took radical action by pegging the Swiss franc against the euro. That worked beautifully for more than three years. Until the European Central Bank signaled it was going to embark on a massive round of bond-buying and the peg was no longer tenable………………………………………..Full Article: Source

How to avoid currency conversion catastrophe on holiday

Posted on 18 June 2015 by VRS  |  Email |Print

Not being able to accurately perform currency conversions is costing UK holidaymakers as they overspend when they’re away, new research says. Barclaycard’s Holiday Habits study claims these currency miscalculations mean we are spending an average of £127 extra per person.
More than half of us (52%) try to keep track of our spending by converting foreign currency into pounds, but over a quarter of us get the calculation wrong. And that miscalculation can be costly – for more than a quarter (27%) the muddled maths mean they run out of money while they’re away………………………………………..Full Article: Source

Currency shocks have mom and pop giving hedged ETFs record cash

Posted on 17 June 2015 by VRS  |  Email |Print

On a recent flight, Susanne Alexandor saw an advertisement for currency-hedged exchange-traded funds. The promotion on the seat in front of her highlighted just how aggressively these strategies are being marketed to the masses.
“They are incredibly appealing for the retail space because the retail investor can separate out the market decision from the currency decision,” said Ms. Alexandor, a Toronto-based senior member of the investment team at Cougar Global Investments Ltd., which has about $1.5-billion (U.S.) in assets under management and advisory for clients including high net-worth individuals………………………………………..Full Article: Source

Currency Volatility Took $32 Billion Chunk Out of First Quarter Results

Posted on 17 June 2015 by VRS  |  Email |Print

Currency volatility’s blow to corporate earnings and revenue is at its highest level in years— amounting to a total cost of at least $31.7 billion for North American and European companies in the first quarter, up from $20.2 billion in the fourth quarter.
North American and European companies that told investors they struggled with foreign currency on quarterly conference calls reported a 57% increase in hits to sales and earnings from currency movements, according to a study by FiREApps. A foreign exchange risk management company, FiREApps analyzed 1200 conference calls to arrive at the latest figure, which was the highest in years………………………………………..Full Article: Source

4 Trillion Reasons China’s Currency Isn’t Ready for Prime Time

Posted on 17 June 2015 by VRS  |  Email |Print

A lot of hyperventilation has lately been devoted to the future international role of China’s currency, the renminbi (RMB). The latest flurry of excitement centers on China’s bid to have the RMB included in the basket of currencies represented in the Special Drawing Rights (SDR) issued by the International Monetary Fund (IMF).
According to accepted wisdom, the RMB’s inclusion in the SDR basket would be a landmark step, formal recognition of its coming-of-age as a global reserve currency. SDR status, many say, would give central banks the green light to add RMB to their reserves, and encourage investors to pour money into Chinese stocks and bonds………………………………………..Full Article: Source

Gold market to remain resilient despite stronger US dollar

Posted on 16 June 2015 by VRS  |  Email |Print

The World Gold Council expects the gold market to remain resilient despite the stronger US dollar. Managing Director (Far East) Albert Cheng said the yellow metal tends to do well during periods of high inflation and can be a good investment hedge against inflation risk.
He said this at the Gold Precious Metals Price Outlook Conference and Financial Markets Price Outlook Conference here on Monday. The World Gold Council is the market development organisation for the gold industry………………………………………..Full Article: Source

Cuba likely to end dual currency system

Posted on 16 June 2015 by VRS  |  Email |Print

Cuba is likely to eliminate its dual currency system by the end of this year in a first step to simplifying a multiple exchange system that investors view as a serious obstacle to business. Cuba currently operates two currencies: the peso (CUP), which largely circulates in the domestic economy, and the so-called convertible peso (CUC).
Residents and tourists can purchase CUCs at government exchange offices at a rate of one for 25 CUP ($0.04). State and foreign companies must exchange CUCs at the official one-to-one rate. Neither currency is convertible outside the island………………………………………..Full Article: Source

Zimbabwe phases out local currency at 35 quadrillion to US$1

Posted on 16 June 2015 by VRS  |  Email |Print

Zimbabwe has started retiring its almost worthless local currency in favor of the US dollar. Today, 35 quadrillion Zimbabwean dollars are equal to US $1, as a result of hyperinflation which hit the country in 2009.
The demonetization process of the Zimbabwe dollar started on Monday and will run till September 30. People with accounts of up to 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars will be paid $5. Those who preserved bills at home will receive a rate of 250 trillion to $1 for their 2008-issued notes and 250 to $1 for their 2009-issued notes………………………………………..Full Article: Source

China Rallies Around Yuan as IMF Mulls Reserve-Currency Inclusion

Posted on 16 June 2015 by VRS  |  Email |Print

China’s central bank is preparing to take new steps to lift the global profile of the yuan as the International Monetary Fund reviews whether to grant it elite status as a reserve currency.
In a report issued late last week, the People’s Bank of China detailed moves it will take to encourage the IMF to take that step, putting the currency on a par with the dollar, euro, yen and pound sterling. Reserve status could potentially encourage other central banks to increase their holdings of the currency………………………………………..Full Article: Source

Renewed EM currency volatility

Posted on 15 June 2015 by VRS  |  Email |Print

Three weeks ago we wrote that the US dollar appears to be consolidating after staging one its longest dollar bull-runs since the 1990s (see Is the US dollar bull run over?, May 25. 2015). But while the US dollar index steadied as the Euro rallied the past three weeks, EM currencies continued their decline against the greenback. The strong US jobs data in May and the increased likelihood of higher US interest rates later this year have rekindled concerns over EM countries with high fiscal account and current-account deficits.
US monetary policy normalization: In last week’s article (see Bond yields rising, June 8, 2015), we mentioned that we are now seeing the initial stages of interest rate normalization. This may result in increasing volatility across markets over the short-term. As bond yields rise due to the prospect of the Fed rate hike later this year, global investors have slowly been deleveraging and moving money out of riskier EM assets this year………………………………………..Full Article: Source

Merkel reignites ‘currency war’ worries

Posted on 15 June 2015 by VRS  |  Email |Print

German chancellor Angela Merkel has reignited fears that world leaders are stoking currency wars by saying that recent strengthening in the euro was making it harder for eurozone countries such as Spain and Ireland to reform.
Her words had an immediate impact on the euro, sending it down 0.9 per cent against the dollar to $1.1150, although the single currency recovered that loss yesterday afternoon. The euro had already come under pressure as worries over a Greek exit from the eurozone weighed on investors………………………………………..Full Article: Source

The new currency trade: Short the Kiwi

Posted on 12 June 2015 by VRS  |  Email |Print

Currency analysts are betting on continued declines for the New Zealand dollar as officials fight to boost growth in a country that was heralded 2014’s rockstar economy. The Kiwi sank over 2 percent to a near five-year low of 70 U.S. cents Thursday after the Reserve Bank of New Zealand (RBNZ) lowered the benchmark cash rate by 25 basis points for the first time in four years.
“Today’s announcement is significant for NZD because it marks the beginning of what could turn into a more prolonged easing cycle. Desynchronization of monetary policy should not only drive NZD/USD below 70 cents but take it lower against many other major currencies,” said Kathy Lien, managing director of FX strategy at BK Asset Management………………………………………..Full Article: Source

Currency Exchanges to Begin as Zimbabwean Dollar Dies

Posted on 12 June 2015 by VRS  |  Email |Print

Zimbabweans will start exchanging “quadrillions” of local dollars for a few U.S. dollars next week as President Robert Mugabe’s government discards its virtually worthless national currency, the central bank said Thursday.
The southern African country started using foreign currencies like the U.S. dollar and South African rand in 2009 after the Zimbabwean dollar was ruined by hyperinflation, which hit 500 billion percent in 2008. At the height of Zimbabwe’s economic crisis in 2008, Zimbabweans had to carry plastic bags bulging with bank notes to buy basic goods like bread and milk. Prices were rising at least twice a day………………………………………..Full Article: Source

People’s Bank of China: Global use of yuan to expand steadily in 2015

Posted on 12 June 2015 by VRS  |  Email |Print

China will continue to push for the yuan’s inclusion in the International Monetary Fund’s currency basket, known as Special Drawing Rights (SDRs), the People’s Bank of China (PBOC) said in a report on yuan internationalisation.
China will also encourage foreign central banks to include yuan assets in their forex reserves, it said. Foreign central banks held about 666.7 billion yuan ($107.42 billion) in yuan-denominated assets by the end of April………………………………………..Full Article: Source

Yen soars after BoJ’s Kuroda says currency “very weak”

Posted on 11 June 2015 by VRS  |  Email |Print

The yen surged to a two-week high against the dollar on Wednesday after the head of the Bank of Japan said the currency was unlikely to fall further because it was already “very weak”, prompting investors to trim huge bets against it.
As oil prices jumped on a report that U.S. oil production was levelling off after years of sharp increases, commodity currencies such as the Canadian and Australian dollars soared by over 1 percent against their U.S. counterpart………………………………………..Full Article: Source

Brazil’s central bank reduces rollover pace of currency swaps

Posted on 11 June 2015 by VRS  |  Email |Print

Brazil’s central bank decided on Wednesday to reduce the rollover pace of currency swaps that mature early next month, a move that is likely to weigh on the Brazilian real.
The bank said in a statement it will auction on Thursday as many as 6,300 currency swaps to roll over similar contracts that mature on July 1. Since the beginning of the month, the central bank had been offering as many as 7,000 contracts per day………………………………………..Full Article: Source

US senators call for currency retaliation over China hacking

Posted on 10 June 2015 by VRS  |  Email |Print

The International Monetary Fund should hold off including China’s currency in a policy basket in retaliation for hacking attacks on the US, two senators have demanded. In a letter on Tuesday to Christine Lagarde, the IMF’s managing director, Charles Schumer and Lindsey Graham said an attack on the records of 4m US government employees that had been blamed on China deserved to be punished.
“This recent cyber attack is one of China’s most brazen yet,” Mr Schumer said. “It is long past time for the international community to rally together and make crystal clear to the Chinese government that if they want to be treated as a leading nation on the global stage, then they need to start acting like it………………………………………..Full Article: Source

RMB looks to enjoy ‘special currency’ status

Posted on 10 June 2015 by VRS  |  Email |Print

According to Reuters news agency, the Group of Seven (G7) Finance Summit has formally agreed on May 29 that they would permit the RMB currency to be included in the ‘Special Drawing Rights’ (SDR) currency basket after a technical review is conducted by the International Monetary Fund (IMF). Beijing believes that the RMB has made tremendous progress and deserves to join the SDR. Nonetheless, the IMF technical review could still cause delays.
Critics claim that China’s capital account is not completely open and the RMB is not fully-convertible, which would impact the formation mechanism of the RMB exchange rate market. Yet, those concerns should not be direct obstacles to RMB’s inclusion in the SDR. How will the IMF determine if the RMB should receive SDR status?……………………………………….Full Article: Source

African currencies feel the heat as commodities drop

Posted on 10 June 2015 by VRS  |  Email |Print

One minute you’re hot, the next you’re not. That sums up the situation many African currencies are in. Ghana, Uganda, Angola and Tanzania are among the countries which have seen their currencies tumble to fresh lows against the dollar this week, as investors - who have flocked to the continent in recent years - pare their bets.
Here’s a quick snapshot of some of the worst performers in 2015: The Ghanian cedi is down 24 per cent this year. The Tanzanian shilling is 21 per cent weaker. The Angolan kwanza has fallen 12 per cent. Other currencies have also been hit, with the South Africa rand falling to a record low last week and the Nigerian naira not far from an all-time low reached earlier in February following an official devaluation last year………………………………………..Full Article: Source

The birth of new reserve currencies

Posted on 09 June 2015 by VRS  |  Email |Print

Some 95 per cent of all global foreign exchange reserves are invested in just four currencies: the US dollar, the euro, the yen and sterling. The central banks of the ‘Big Four’ are all expanding their balance sheets or have been doing so for years with no sign of immediate reversal.
They are all trying to convert huge debt problems into inflation problems, and when they succeed their currencies will weaken sharply. In this currency war, EM central banks risk suffering the most collateral damage. Their reserves – so many of them held in the big four currencies – will be decimated in purchasing power terms………………………………………..Full Article: Source

Turkish currency plunges on shock election result

Posted on 09 June 2015 by VRS  |  Email |Print

President Recep Tayyip Erdogan’s ruling AK Party loses parliamentary majority sending the Turkish lira and stock market into a tailspin. The Turkish currency has fallen sharply against the pound in foreign exchange markets and investors have taken fright sending shares lower after a shock result in the country’s election.
The Turkish lira fell to an all-time low as it slumped 5.1pc to 4.2738 lira to the pound, and the Turkish index of 100 leading shares dived 6.3pc lower early trading. At the start of the year £1 was worth 3.6 Turkish lira, and after the surprise election result holidaymakers money now goes 16pc further with £1 worth about 4.3 Turkish lira………………………………………..Full Article: Source

Will Former Soviet Republics Adopt A Single Currency?

Posted on 09 June 2015 by VRS  |  Email |Print

Given the eurozone’s many woes, it’s hard to imagine why another region would want to embark on a unified currency project. But the world is full of surprises. On May 29, at a summit in Kazakhstan, Russian Prime Minister and former President Dmitry Medvedev announced that the Eurasian Economic Union (EEU) would “consider the possibility and conditions of launching a monetary union in the long term.”
RT and Sputnik, both owned by the Russian state and widely decried as Kremlin propaganda outlets, reported the story in broadly the same terms. This is not the first time the idea of a single currency has been floated. According to Business New Europe, Putin called for member states to work towards a single EEU currency twice in March………………………………………..Full Article: Source

Currency volatility increases credit risk for exporters

Posted on 08 June 2015 by VRS  |  Email |Print

A weaker yen and euro might be good news for Hongkongers shopping in Japan and Europe but it is bad news for trading companies as volatile currency markets could see more companies failing to pay bills on time. “Currency volatility is a key risk for the credit and payment markets this year,” said Fabrice Desnos, the Asia-Pacific head of credit insurer Euler Hermes.
Desnos said many currencies that had traditionally been considered safe and stable had exhibited high degree of volatility. The Swiss franc rose 30 per cent against the euro in January after a cap was removed, before dropping back to a gain of about 20 per cent………………………………………..Full Article: Source

Russia’s Sberbank Lending In Chinese Currency

Posted on 08 June 2015 by VRS  |  Email |Print

Russia’s biggest commercial lender is issuing letters of credit in the Chinese yuan. Sberbank said Friday that it has teamed up with the Export Import Bank of China to grant its first line of credit in yuan to Russian pharmaceutical giant Pharmasyntez. The company approached Sberbank about opening a yuan credit line in order to pay for pharmaceutical goods it imports from China.
Russian state media hopped all over the announcement this weekend. RT in particular exists to report about how awful the U.S. and European Union are. And after Russia discovered China this year, the Russian neighbor has become like a new exotic girlfriend being rubbed in the face of the ex………………………………………..Full Article: Source

IMF may include RMB in currency basket in November

Posted on 08 June 2015 by VRS  |  Email |Print

In November 2015, the International Monetary Fund will conduct another round of screening procedures on whether to include the renminbi in the currency basket of its special drawing rights (SDR), almost five years since the last screening, the Beijing-based Economic Observer reports.
On May 26, the IMF, after ending its evaluation on China’s economy, said the renminbi over the past year has seen its real effective exchange rate (REER) appreciate sharply, signaling that the currency is no longer undervalued. This is the first time the IMF has not judged the renminbi to be undervalued, indicating that the currency has a good chance of being included in the SDR currency basket in November………………………………………..Full Article: Source

New ETFs Marry Currency Hedging and Dividends

Posted on 05 June 2015 by VRS  |  Email |Print

It has been established that investors like dividend exchange traded funds and it has been affirmed this year that there is plenty of affinity for currency hedged funds. After all, four of the top 10 asset-gathering ETFs on a year-to-date basis are currency hedged products.
The two concepts have been previously married in single ETFs and WisdomTree (NasdaqGS: WETF) adds to the group of currency hedged dividend funds today with the debuts of the WisdomTree International Hedged SmallCap Dividend Fund (NYSEArca: HDLS) and the WisdomTree Global ex-U.S. Hedged Dividend Fund (NYSEArca: DXUS)………………………………………..Full Article: Source

The currency hedging trade is starting to fade

Posted on 05 June 2015 by VRS  |  Email |Print

The trendiest trade of 2015 has lost some of its mojo lately. With global central banks in overdrive to devalue and the U.S. heading in the opposite direction, investors had been piling into exchange-traded funds that hedged against big currency moves.
Four of the top 10 ETFs this year in terms of fund inflows are related to currency hedging. That includes the most popular one, the WisdomTree Europe Hedged Equity, which has taken in $13.6 billion, according to ETF.com. The fund is up a gaudy 16.8 percent year to date but is down 2.5 percent over the past week and off 0.4 percent for the month. The funds often use a balance of dividend-paying and export-based companies to hedge currency exposure………………………………………..Full Article: Source

Here’s the next stage in global currency wars

Posted on 05 June 2015 by VRS  |  Email |Print

The race for a devalued currency is set for a new set of twists and turns this summer as analysts contemplate how the U.S. Federal Reserve will deal with a dollar that is far stronger than its global counterparts. According to Societe Generale’s Albert Edwards, the spark for this new round of “currency wars” – whereby countries manipulate foreign exchange to gain a global advantage — is the Japanese yen, which fell to its weakest against the greenback since 2002 on Tuesday.
The uber-bearish strategist predicts that “off the scale” quantitative easing (QE) by the Bank of Japan could see it continue to weaken and “set off another round in the global currency war.” He adds that this could have a detrimental effect on major economies around the world………………………………………..Full Article: Source

Euro takes a breather after sharp rally, awaits ECB’s Mario Draghi

Posted on 04 June 2015 by VRS  |  Email |Print

The euro took a breather on Wednesday a day after tracking soaring Bund yields to post its second biggest daily gain since Oct. 2011, with investors turning cautious in case the European Central Bank expressed any unease over its recent rise.
With the ECB committed to turning inflation back towards 2 percent, some traders expect the bank’s head Mario Draghi to use Wednesday’s news conference to push back against the euro’s strength and any talk that the bank’s asset purchase could be curtailed………………………………………..Full Article: Source

Currency-Trading Platform 360T Group Explores Sale

Posted on 04 June 2015 by VRS  |  Email |Print

Currency-trading platform 360T Group is exploring a sale of the company, in a deal that could fetch more than €600 million ($675 million), according to people familiar with the matter. The closely held company has attracted interest from a number of global-exchange and financial-data firms, the people said.
To be sure, it’s possible there will be no deal for the company soon. 360T’s platform consists of software that helps corporations, banks and other financial firms arrange currency and derivatives trades with each other. Its software also helps corporate clients hedge their currency risk. ……………………………………….Full Article: Source

Venezuela’s currency isn’t worth a penny

Posted on 04 June 2015 by VRS  |  Email |Print

Just a month ago, $1 was worth 279 bolivars. That was already pretty dismal for Venezuela. Now $1 equals 408 bolivars, according to the unofficial exchange rate, which most Venezuelans get when they try to trade currency.
Put another way, one bolivar equals $0.002 — less than a penny. The country’s currency has lost nearly half its value since the beginning of May, according to dolartoday.com, a website that tracks the unofficial exchange rate………………………………………..Full Article: Source

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