US dollar: The dollar will be somewhat stronger over the next six months, though the currencies that it appreciates against the most may change depending on market developments.
If US economic data continues to improve, the idea that the Federal Reserve may begin tightening its monetary policy will continue to gain steam, and this will see the dollar strengthen relative to those currencies where central banks are [keeping interest rates low]………………………………………..Full Article: Source

Asia came to currency early, and it soon learnt to treat coinage as a weapon of war. Indeed, the coins minted in China during the warring states era, almost 500 years before Christ, were made in the shape of knives.
This may explain why the west tends to be terrified by Asian currency policy. China has long been branded a currency manipulator. Japan’s aggressive new attempt to stimulate its economy with monetary policy under prime minister Shinzo Abe has led other countries to complain that the yen is deliberately being devalued………………………………………..Full Article: Source

Get ready to rumble. Colombia is stepping up the fight against the appreciation of its currency, the peso. Having spent nearly $5bn last year buying dollars to stem the peso’s rise, the government this week said it was willing to deploy double the amount – or $10bn – this year keep the currency in check.
In February alone, Colombia’s central bank spent over $800m in dollar purchases………………………………………..Full Article: Source

A bipartisan group of lawmakers began a new attempt on Wednesday to pass legislation that puts pressure on China to change its currency practices, reviving an effort that previously failed to make it to the finish line.
The legislation, which has 101 co-sponsors, is similar to bills that passed the House of Representatives in 2010 and the Senate in 2011, but ultimately failed to win final congressional approval. It came as Treasury Secretary Jack Lew was wrapping up a two-day visit to China, where he pressed Beijing to allow the yuan to rise further against the dollar………………………………………..Full Article: Source

Wearing the disguise of austerity, the euro has emerged as the gatekeeper of what is fast becoming a debtors’ prison.
The Troika of the ECB, IMF and European Commission acting in concert have become more like another Troika–of judge, jury and executioner–for any nation within the euro zone that dares not follow the letter of budgetary imposition. The latest country bound by these handcuffs: Cyprus………………………………………..Full Article: Source

The gold naysayers are still out there in droves, other than Lady Gaga who is ensconced after surgery in a custom-designed, 24-carat gold plated wheel chair.
There is no denying that gold is off to its worst yearly start in a quarter century and that just in February investors sold 106 metric tons of gold from gold ETFs. (Even so, this is just a small portion of the fund’s holding and gold has gone up since then, a bullish sign) The newspapers headlines are full of eulogies for the gold bull market saying it’s finished, washed up, over………………………………………..Full Article: Source

The drachma may no longer exist, but the economic crisis in Greece has inspired some communities to invent new ways of trading goods and commodities.
In a backlash to the euro, enterprising Greeks have created their own currency systems, such as the TEMs, in which individuals earn units of TEMs based on goods or services rendered. The system bypasses the euro altogether, and some have seen the cashless system as an easier and more direct way to engage in trade………………………………………..Full Article: Source

The euro sank against the dollar in Asian trading hours Monday as news that Cyprus plans to impose a one-time levy on bank deposits as part of a sovereign bailout deal spooked investors.
Over the weekend, international lenders agreed to provide a 10 billion euro ($12.9 billion) bailout for Cyprus, but demanded that the nation help pay for its rescue by taxing bank deposits — an unprecedented step in the long-running euro-zone crisis………………………………………..Full Article: Source

What will be the market impact from the Cyprus bailout? Citi FX guru Steven Englander explains what to watch in the currency space. The developments in Cyprus will lead to EUR selling and USD, CHF, GBP, NOK and SEK buying (in that order).
The issue is whether to believe that the Cyprus levy on depositors is one-off, but depositors and investors elsewhere could easily see this as another in a string of ‘one-offs’ and react badly. The risk-return to depositors in countries with weak banking systems may not favor taking the risk that Cypriot banking system was so unique that such a levy would never be considered elsewhere. The levy on deposits ostensibly covered by deposit insurance may also undermine confidence in weak banks………………………………………..Full Article: Source

The South Korean won was the top decliner among emerging-market currencies Thursday, dragged down by continued geopolitical tensions and after the country’s central bank kept rates on hold.
Heightened rhetoric from North Korea in recent weeks has left investors on edge about South Korean assets, particularly the won. A rise in tensions between the two Koreas on Thursday focused on an island that the North attacked in 2010, as the South’s prime minister visited the island and North Korean media reported that leader Kim Jong Eun had directed a live-artillery drill close to it. Earlier this week, North Korea “declared invalid” the Korean War armistice………………………………….Full Article: Source

In a world of measly returns, investors have to chase after scraps. At the Bloomberg FX conference at the British Museum this morning, one speaker pointed out that, although the Swedish central bank has cut rates four times over the last 12 months, just the change in policy tone from easing to neutral has turned the krona into a strong currency.
Indeed, the useful WCRS Bloomberg page shows that the krona has been the best performing currency over the last year; the worst (predictably) has been the yen…………………………………….Full Article: Source

The strong performance of many African economies can come with an old fashioned sting in the tail. With import demand outstripping export growth in some of the continent’s fastest expanding economies, rising trade imbalances are putting pressure on currencies.
African and international investors hedge against this by spreading risk – one factor that is driving African banks and businesses across borders…………………………………….Full Article: Source

The beleaguered US dollar, long forlorn of any vestige of hope by the fiscal and monetary policy-induced abasement characteristic of the last 11 years, is enjoying its strongest multi-week rally since May 2012. Yes, you heard me right: There is currently US dollar strength.
Is this a safe haven play (Credit: “Er, yes?”; Equities: “Of course not!”)? Is the US dollar (USD) stronger on an absolute basis, or is the greenback merely “less bad,” evincing relative strength versus the comparatively miserable constituent contra-currencies comprising the USD Index?……………………………………….Full Article: Source

The Dow Jones Industrial Average climbed a steep wall of worry and last Tuesday returned to its all-time high from late 2007. The Dow finished at 14253.77, topping the previous record set in October 2007 and is already up 8.8% for the year.
The Fed’s expansive monetary policy to prop up the economy has kept stocks climbing higher despite a less than glowing global economy. By pumping trillions into the financial system, the Fed has convinced investors it will provide a safety net for future shocks. In addition, by keeping interest rates extremely low, the Fed is forcing investors to seek higher returns in the stock market………………………………………..Full Article: Source

After years of grabbing the spotlight in US-China economic relations, US concerns over the value of Beijing’s currency appear to be fading, giving ground to newer issues like cyber-security and trade secret theft. Some lawmakers continue to argue a weak Chinese yuan is robbing jobs from the United States. But action to force a change is unlikely and the issue will probably remain on the back burner as long as the US economy continues to improve.
An increase in the value of the yuan, a big drop in China’s global trade surplus and a rise in labor costs that has made Chinese products less competitive have conspired with a pickup in US job growth to take the wind out of Washington’s sails………………………………………..Full Article: Source

Chinese commerce minister Chen Deming expressed concern Friday about loose central bank policies pushing down the value of major currencies, as the Japanese yen extended its recent falls. Chen told reporters he was “very concerned” this year with “the competitive depreciation of currencies in the world and the negative impact on the global economy led by the excess issuance of money”.
He said that declines in the value of the yen, the US dollar and the euro would have a big impact on developing countries, including China. Chen added that monetary easing policies by central banks in the United States, Japan and the European Union to stimulate their economies “should not spread out to affect other countries”………………………………………..Full Article: Source

The Canadian dollar closed higher Thursday after the latest trade figures showed Canada’s merchandise trade deficit narrowed in January. The currency rose 0.19 of a cent to 97.14 cents US as Statistics Canada said the trade deficit with the world narrowed to $237 million in January from $332 million in December.
Exports rose 2.1 per cent to $39.1 billion while imports decreased 1.9 per cent to $39.3 billion. Meanwhile, the U.S. trade deficit widened in January, reflecting a big jump in oil imports and a drop in exports………………………………………..Full Article: Source

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IMF confirmed that the AUD and CAD will appear as reserve currency within three months. This emphasizes the spiraling demand for additional reserve currencies and the New Zealand dollar has the best chance to join the list, according to experts.
“The IMF is expanding the list of currencies separately identified in the Composition of Foreign Exchange Reserves reporting (COFER) template,” said an IMF spokeswoman as cited by The Wall Street Journal. “The implementation of the revised COFER Report Form, with separate identification of the Australian dollar and Canadian dollar, is scheduled for the first half of 2013.”……………………………………….Full Article: Source

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U.S. dollar prices to buy gold hovered around $1,575 per ounce Wednesday morning in London, in line with last week’s close, as dealers in Asia reported an increase in demand for physical bullion, in contrast with exchange traded funds, which have continued to see selling, in what one analyst calls a “tug of war” between physical buying and ETF selling.
“Short-term, gold should drift lower to the short-term support line at $1,569/65 or even to the previous low at $1,555,” say technical analysts at Societe Generale. “Initial support is at $1,564.88,” adds UBS. “A break below [that level] would expose $1,556.50, the June 28 low and then $1533.70, the May 16, 2012 low.”……………………………………….Full Article: Source

The euro lagged gains in growth-linked currencies on Wednesday, held back by concern that the European Central Bank could flag future interest rate cuts after its monthly policy-setting meeting on Thursday.
European stocks rose, mirroring the record high hit on the Dow Jones industrial average and lending support to commodity currencies like the Australian dollar. But the euro still has some way to go before it breaks above its downtrend since early February………………………………………..Full Article: Source

Despite slow Asian and European sessions, the US and Australian dollars have assumed leadership roles, while the British pound and euro both struggle beneath the weight of political and economic uncertainty. It was a very quiet night of FX trading as currencies traced out very narrow ranges in listless dealing with no fresh news to move the markets.
The euro once again failed to clear the 1.3080 level and then quickly fell into the 1.3030’s after the release of Eurozone GDP showed exports posted the biggest decline since Q1 of 2009. Furthermore, comments from Italy’s Pier Luigi Bersani offered no hope of a solution to the Italian election quagmire………………………………………..Full Article: Source

The euro struggled to gain ground on Wednesday with investors sidelined ahead of the European Central Bank policy meeting, but commodity currencies made the most of improved risk appetite that saw the Dow Jones hit a record-closing high.
The better mood was fuelled by the growing prospect of further easing by the ECB, Bank of England and Bank of Japan, along with the Federal Reserve’s commitment to bond buying………………………………………..Full Article: Source

The euro slipped against the dollar Monday as caution ahead of a round of monetary policy meetings this week pushed the currency to its lowest level against the greenback in over two months. The euro at $1.3019, down from $1.3066 late Friday.
The shared currency fell as low as $1.2981, according to FactSet data, back below the psychologically important $1.30 handle, with concerns about a downgrade of Italy’s credit rating resurfacing on Monday. Inconclusive election results in Italy last week spurred worries about political instability in the euro zone………………………………………..Full Article: Source

The search for yield in currency markets is leading investors into new emerging market currencies in sub-Saharan Africa, according to banks focused on the region.
African currencies might not attract as much attention as Chinese renminbi, the Russian ruble or the Mexican peso, but when it comes to emerging markets, some participants believe sub-Saharan Africa offers better opportunities to generate investment returns as the markets become gradually more liquid and transparent………………………………………..Full Article: Source

China’s foreign currency reserves, which have surged more than 700 percent since 2004, are enough to buy every central bank’s official gold supply — twice. The CHART OF THE DAY shows how China’s foreign reserves surpassed the value of all official bullion holdings in January 2004 and rose to $3.3 trillion at the end of 2012, data compiled by Bloomberg show.
The price of gold increased 263 percent from 2004 through Feb. 28, with the registered volume little changed, according to data based on International Monetary Fund and World Gold Council figures. By comparison, China’s reserves rose 721 percent through 2012, while the combined total among Brazil, Russia and India rose about 400 percent to $1.1 trillion………………………………………..Full Article: Source

A crowded calendar of central-bank meetings this week could give currency traders new clues about whether weak global growth will lead to easier monetary policy in the developed world.
Authorities in Europe, the U.K., Australia, Canada and Japan will all hold meetings. Investors will pay close attention to comments from top central bankers for signals on what actions they may take later in the year. “It’s all about the messaging” from central banks, said Greg Anderson, a strategist at Citigroup in New York………………………………………..Full Article: Source

Foreign Institutional Investors (FIIs) will now be allowed to trade in the exchange-traded currency derivative segment. They will be able to participate to the extent of their Rupee exposure in India.
Besides presence in equities, FIIs engagement in India has also been growing in the debt market. FIIs have invested Rs 1.42 lakh crore in Indian debt instruments in the last five years (CY2008-12). In CY2013 so far, they have invested Rs 6,500 crore. So, they need to more avenues to hedge their currency risk………………………………………..Full Article: Source

On Wednesday, Brazilian Finance Minister Guido Mantega, the poster child of the so-called “currency war”, said his country is no longer on the battle field. Bloomberg reported Mantega saying Brazil was abandoning policies to weaken the local currency, the real, even though Japan is depreciating the yen and the U.S. continues with the free money policies that started the currency war in the first place after the 2008 finance crisis erupted.
Brazil’s real is hovering around two to the dollar. Not too long ago, it was closer to R$1.65. And at the height of the Brazilian bubble in mid-2008, it was as strong as R$1.55………………………………………..Full Article: Source

Last month two Egyptian banks refused to give Ahmed El-Rifai the dollars he needed. His company, Egyweb, sells ads locally for Facebook (FB), and he had to pay the U.S. company its share of the revenue in greenbacks.
Frustrated, El-Rifai turned to a more reliable source: the black market, which sold him dollars at an 8 percent markup to the official exchange rate of 6.7 pounds to the dollar………………………………………..Full Article: Source

One of the intriguing things about the foreign exchange markets is that it is all about relative prices. Many an American commentator, faced with trillion-dollar deficits, dysfunctional Washington and zero rates at the Federal Reserve, has predicted the collapse of the dollar.
A quick trawl on Amazon.com found books with titles such as “The Dollar Meltdown”, “The Dollar Crisis”*, “Survive and Thrive after the Collapse of the Dollar”, “The Collapse of the Dollar and How to Profit from It”, not to mention “The Trillion Dollar Conspiracy; How the New World Order, Man-Made Diseases and Zombie Banks are Destroying America”………………………………………..Full Article: Source

The euro rose against the dollar Wednesday, with gains for the European shared currency coming after financially troubled Italy saw its borrowing costs rise less than had been feared.
The euro traded at $1.3136, up from $1.3065 late Tuesday. Against the Japanese currency, the euro rose to ¥121.11 compared with ¥120.05. The prospects for Italian political gridlock sent the euro skidding earlier this week after an inconclusive parliamentary election, which raised worries about demand for Italy’s debt………………………………………..Full Article: Source

If you were expecting calm in the currency markets this week after a rush of news over the past several days, you’re likely to be disappointed.
For starters, the usual month-end round of economic reports is coming. “Friday is the big day with PMIs, flash euro area February inflation, U.S .auto sales and January personal consumption and income figures,” says Marc Chandler, chief currency strategist at Brown Brothers Harriman………………………………………..Full Article: Source

Before any British citizens start complaining about global warming, they really ought to stop in gratitude for the last episode: The retreat of the glaciers flooded what is now the North Sea basin and filled the English Channel.
Their history since William the Conqueror has had a one-way flow of invading armies; without climage change, the Brits might be speaking French and having to contend with someone else’s dysfunctional and occasionally disrobed royal family………………………………………..Full Article: Source

The world breathed a collective sigh of relieve when finance ministers of the leading economies declared earlier this month in Moscow that they would refrain from waging a currency war. In a communiqu, they said: “We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes.”
They also refrained from naming Japan as the culprit for instigating the latest threat of global economic warfare. It has adopted aggressive monetary and fiscal policies that have driven down the value of the yen by 20 percent against the US dollar in the past couple of months. Instead, the communiqu sought to reaffirm the G20’s commitment to move “more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals”………………………………………..Full Article: Source

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Latin American currencies weakened on Thursday for a second consecutive session after a series of weak economic data in the United States and Europe fueled concern about the global economy, driving investors to the perceived safety of the dollar.
The data, which showed deteriorating business conditions in Europe and the United States, as well as a struggling U.S. labor market, came as investors still fretted about a Federal Reserve threat to scale down or withdraw its monetary stimulus program before expected…………………………………….Full Article: Source

What’s the fair value of a euro? That depends on whether the answer comes from Berlin or Paris. German Chancellor Angela Merkel on Wednesday weighed in on what the currency should be worth, saying the euro’s exchange rate is “normal in the historical context.” French Finance Minister Pierre Moscovici had a different take earlier this month, calling the euro “perhaps too strong”.
Economists say Ms. Merkel is right—technically. The euro’s buying power is roughly where it should be, according to the Peterson Institute for International Economics, which judges currencies based on countries’ current-account balance…………………………………….Full Article: Source

The Polish zloty was a top performer among emerging-market currencies Wednesday, spurred by expectations that recent positive data might lead to a central bank less keen on cutting interest rates.
The zloty continued to be buoyed by recent economic data that beat expectations. On Tuesday, data showed Polish industrial production rose 0.3% in January, when markets had expected a decline of 3.5%. That, along with lower-than-expected inflation figures late last week, means the central bank might have to ease monetary policy less aggressively than markets had projected, analysts say…………………………………….Full Article: Source

Gold dipped below $1,600 last week, falling to a six-month low, much to the chagrin of gold investors. I find the timing of the correction peculiar, given the G20 Finance Ministers Meeting taking place over the weekend.
There’s been a growing debate over Japan’s move to devalue its currency to stimulate growth, with reaction from the G-7 leaders stating that “domestic economic policies must not be used to target currencies,” reports Reuters……………………………………Full Article: Source

The Turkish lira fell to its weakest level against the dollar in more than a month Tuesday after Turkey’s central bank cut interest rates. While Turkey’s central bank was widely expected to ease monetary policy, its moves Tuesday were seen as being slightly more aggressive than expected.
The central bank cut its overnight borrowing rate to 4.50% from 4.75%, and its overnight lending rate to 8.50% from 8.75%, while keeping its one-week benchmark interest rate steady at 5.50%……………………………………Full Article: Source

The options market is signaling the threat of a breakup in the 17-nation euro bloc is disappearing as the price of insurance against wild swings in the region’s single currency fall to a five-year low.
Butterfly options that protect against both gains and declines slid to the lowest since March 2008 on Feb. 4. Implied volatility on three-month options on the euro-dollar exchange rate has risen about half as much as a broader gauge of currency volatility this year……………………………………Full Article: Source

G20 finance chiefs sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a global currency war without singling out Japan for criticism.
Two days of talks between G20 finance ministers and central bankers ended in Moscow on Feb 16 with a pledge not to “target our exchange rates for competitive purposes”, according to a statement. That’s stronger than their position three months ago and leaves Japanese officials under pressure to stop publicly giving guidance on their currency’s value…………………………………….Full Article: Source

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The mobile money/virtual currency arena is getting more and more crowded. And the question remains: will the concept ever gain the critical mass needed to become the next big thing in finance?
From Bitcoin to M-pesa, Square, Paypal, Dwolla and Ven (to name just a few) … the number of new concepts is piling up. One of the latest is Mobino, brought to you by Jean-François Groff, whom FT Alphaville met on the sidelines of this year’s Lift2013 conference in Geneva. We followed up with an interview last week…………………………………….Full Article: Source

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The world’s largest economies took a step toward common global guidelines for exchange-rate policies with a pledge Saturday to refrain from targeting their currency policies to gain a competitive trading advantage.
The pledge, in a statement produced by finance ministers and central bankers from Group of 20 industrial and developing nations following two days of meetings here, marked the first time the group had agreed to such an explicit guideline on the issue. It came as officials sought to defuse global tensions over volatile exchange rates…………………………………….Full Article: Source

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Talk of a so-called currency war has been heating up, and it might finally light a fire under gold, too. Efforts by countries such as Japan to boost growth with massive stimulus programs — which in turn have devalued their currencies, an aid to exports — can benefit prices for gold.
These have started to alter the precious metal’s relationship with the foreign-exchange market and expand its role as a safe-haven asset. “We are now moving irrevocably to a time when gold will measure currencies, not currencies measure gold,” said Julian Phillips, a South Africa-based contributor and founder at GoldForecaster.com………………………………………..Full Article: Source

Big declines in both the yen and crude oil may be giving the market a sneak peek at a near-term correction. But whether or not you believe a correction would be healthy at this stage, MoneyShow’s Tom Aspray shares his market analysis and what you should watch for this week.
The action Friday in the stock market was overshadowed by the sharp declines in crude oil and gold in early trading. The widely watched SPDR Gold Trust (GLD) dropped to its lowest level since last August, and the nearby crude oil contract was down close to 2% during the day. Both did close above the early lows………………………………………..Full Article: Source

What world currencies does one of the world’s biggest investment banks like the most right now? Well, some background information first. This weekend’s G20 meeting is framed by concerns of competitive exchange rate devaluations, with investors recalling late 2010 and early 2011 as a recent example of emerging market central bankers acting to combat currency appreciation. The currency war was in full swing.
But this time around at the G20 in Moscow, economic growth-inflation dynamics are not conducive to material emerging market currency appreciation………………………………………..Full Article: Source

The world’s largest economies took a step toward common global guidelines for exchange-rate policies with a pledge Saturday to refrain from targeting their currency policies to gain a competitive trading advantage.
The pledge, in a statement produced by finance ministers and central bankers from Group of 20 nations following two days of meetings here, marked the first time the group had agreed to such an explicit guideline on the issue. It came as officials sought to defuse global tensions over volatile exchange rates………………………………………..Full Article: Source

The world economy faces a new threat. Instead of a banking collapse or too much debt, fears are growing that countries are using their currencies as an economic weapon. History suggests that’s never a good thing.
If too many countries try to weaken their currencies for economic gain - sparking a “currency war” - that could stifle business confidence and investment, sow turmoil in financial markets and derail a fragile global economy………………………………………..Full Article: Source

Russia fueled the G-20 currency war debate on Thursday, when the Russian finance minister criticized countries that are trying to stimulate their economies through currency devaluation.
“We believe countries should not be competing through their currency policies. They should be competing based on their economic activity,” Finance Minister Anton Siluanov told CNBC at the G-20 meeting of major economic powers in Moscow………………………………………..Full Article: Source

The Group of 7 industrialized countries appeared to tamp down talk of a currency war in a statement this week that said markets should determine exchange rates and that countries should use fiscal and monetary policies to achieve faster growth.
It may help curb fears that stagnant economies will devalue their currencies to make their exports more affordable relative to competitors………………………………………..Full Article: Source