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Commodities Briefing - Category | Currencies more

Commodity Dollars Near Lows Amid Bets Fed Patience Growing Thin

Posted on 18 March 2015 by VRS  |  Email |Print

The currencies of commodity-exporting nations including Australia and New Zealand traded near the lowest in at least four years as traders braced for a Federal Reserve statement that may indicate it’s ready to raise interest rates.
The Australian dollar was less than one U.S. cent away from its lowest since May 2009, while the New Zealand currency was weighed down by a disappointing dairy auction. The U.S. currency dropped for a second day against the euro on Tuesday and slid from the highest since at least 2004 against a basket of major peers after housing starts lagged behind forecasts………………………………………..Full Article: Source

Brazil’s Real Gains as Weak U.S. Data Damp Fed Increase Outlook

Posted on 18 March 2015 by VRS  |  Email |Print

Brazil’s real climbed from a 12-year low as speculation the Federal Reserve will signal it’s in no hurry to raise borrowing costs buoyed emerging-market assets.
The real appreciated 0.2 percent to 3.2397 per dollar at the end of trade in Sao Paulo after dropping to the weakest intraday level since April 2003. Three-month implied volatility on options for the real, reflecting projected shifts in the exchange rate, was the highest among 16 major currencies………………………………………..Full Article: Source

U.S. Dollar Takes Gold ETFs For A Ride

Posted on 17 March 2015 by VRS  |  Email |Print

Gold and bullion-related exchange traded funds have exhibited an inverse relationship against the U.S. dollar, but the moves this time around may not be as severe. Over the past year, the SPDR Gold Shares (NYSEArca: GLD) has declined 16.1%, whereas the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) jumped 24.2%.
Gold has shown a history of moving inversely with the USD. In 1971, U.S. President Richard Nixon ended the U.S. dollar to gold conversion, sending the dollar into a free fall and lifting gold prices to a peak of $850 per ounce, reports Henry Sanderson for the Financial Times………………………………………..Full Article: Source

Goodbye dollar? Here’s the currency of the future

Posted on 17 March 2015 by VRS  |  Email |Print

How will you pay for groceries or gasoline in the future? According to Kabir Sehgal, author of the new book “Coined,” it might not be the old familiar greenback. As technology advances, so do currencies and payment systems.
“Look at Amazon (AMZN) points, Starbucks (SBUX) points. These are effectively the new currencies,” he says. “There are more frequent flyer miles in circulation than dollars, so it’s one of the biggest currencies in the world.” Sehgal believes that the future of money may involve the linking of corporate currencies………………………………………..Full Article: Source

Currency Volatility Damage to Earnings Seen Worsening in Quarter

Posted on 17 March 2015 by VRS  |  Email |Print

After doubling in the fourth quarter, the negative impact of swings in foreign-exchange rates on corporate earnings is likely to worsen in the three months ending March 31. That’s the outlook of FiREapps, a Scottsdale, Arizona-based company that advises businesses on reducing the impact of currency volatility.
For the 846 North American companies monitored by FiREapps during the final three months of 2014, the average negative currency impact was 6 cents per share, more than double the average of 2 to 3 cents for the prior two years………………………………………..Full Article: Source

Commodities fall to 12-year low as dollar rises amid surplus

Posted on 16 March 2015 by VRS  |  Email |Print

Slumping energy prices led commodities to a 12-year low as the dollar’s best rally since 2008 reduced the investment appeal of raw materials amid surpluses of everything from oil to sugar. The Bloomberg Commodity Index fell 1.4 per cent to 97.5777, the lowest level since August 2002, dragged down by crude oil and raw sugar.
The Bloomberg Dollar Spot Index, tracking the greenback against 10 currencies, is set to climb the most since 2008 this quarter and reached the highest level in data going back to the end of 2004. A stronger dollar tends to deter investment in raw materials. Commodities are tumbling as economies expand in the US and cool in other nations, driving the dollar higher. The Federal Reserve will hold a policy meeting this coming week as strength in the US labour market fuels speculation that the central bank will lay the groundwork for higher borrowing costs………………………………………..Full Article: Source

No, We’re Not in a Currency War

Posted on 16 March 2015 by VRS  |  Email |Print

Anyone paying attention to the financial media could easily get the impression that the world is hellbent on stealing the U.S. economic recovery. Central banks from Frankfurt to Beijing, the story goes, are pushing down their currencies’ exchange rates against the dollar — and against one another — in a craven effort to make their exports cheaper.
Lest this “currency war” meme lead politicians to do anything inadvisable, let’s be clear: It’s a load of baloney. True, there has been a lot of action lately in foreign-exchange markets. Even as the U.S. Federal Reserve has moved toward raising interest rates, policy makers in other major economies — Europe, Japan and China — have been pushing rates down, sometimes into negative territory………………………………………..Full Article: Source

Currency derivatives’ turnover falls over 33% in February

Posted on 16 March 2015 by VRS  |  Email |Print

Currency derivatives turnover at the nation’s three bourses fell by more than 33 per cent to Rs 4.80 lakh crore during February over the preceding month. The three bourses - NSE, BSE and MCX-SX - together had recorded a currency derivative turnover of Rs 7.21 lakh crore in January 2015, latest data showed.
Currency derivative volumes on the three stock exchanges also plunged by nearly 33.45 per cent to 7.63 crore in February as against 11.46 crore in January, 2015. Currency derivative contracts allow investors to take position on change in the foreign exchange rates between pairs of two currencies, such as rupee and dollar………………………………………..Full Article: Source

Commodities rallying as dollar takes a breather

Posted on 13 March 2015 by VRS  |  Email |Print

A pullback for the dollar and some bullish China data are helping all things commodity. In a broadly upbeat base metals sector, the price of copper is surging 2.7 per cent to $5,882 a tonne, while nickel and zinc are gaining 1.9 per cent and 1.1 per cent, respectively.
All these raw materials are quoted in greenbacks, so a pause in the buck’s rally - the dollar index is dipping 0.7 per cent from its 12-year high - is delivering a traditional rally for the sector. They are also getting a boost from hopes of more demand from China, following news that Chinese banks’ new loans in February hit Rmb1tn, roughly $163bn, far more than economists had expected………………………………………..Full Article: Source

Why Currency Hedged ETFs Are Just Getting Started

Posted on 13 March 2015 by VRS  |  Email |Print

Investors in traditional international funds are waking up to the realization that currencies play a vital role in generating returns. The majority of funds that track both developed and emerging markets use a U.S.-dollar denominated structure that faces an uphill battle during periods of prolonged dollar strength.
Dodd Kittsley, head of ETF strategy at Deutsche Asset & Wealth Management, recently wrote a new market outlook report that underscored the headwind a rising U.S. dollar creates for these assets. He pointed out that in 2014 the MSCI EAFE Index returned 5.9 percent in local currency terms, but –4.9 percent in U.S. dollar terms, a difference of 10.8 percentage points………………………………………..Full Article: Source

Are currency wars looming in Asia?

Posted on 13 March 2015 by VRS  |  Email |Print

Does the rising wave of surprise interest-rate cuts in Asia portend a currency war? Central bankers won’t let the term leave their lips. Bank of Korea governor Lee Ju-yeol yesterday, in announcing an interest-rate cut to a record low 1.75 per cent, was studious in denying such a thing existed.
Yet both South Korea and Thailand, which cut rates on Wednesday, have reason to worry about the strengthening of their currencies. The won has lost value against a resurgent US dollar, but has strengthened 10 per cent against the euro since the start of 2015. It is also up 10 per cent against the Japanese yen over the past year………………………………………..Full Article: Source

China looks to add yuan to IMF currency basket

Posted on 13 March 2015 by VRS  |  Email |Print

China is in talks with the International Monetary Fund to include the yuan in the institution’s basket of reserve currencies, according to a central bank official. “We are evaluating this and are actively in talks with the fund,” People’s Bank of China Deputy Governor Yi Gang said at a press conference in Beijing Thursday.
“We hope it can fully consider the progress of yuan internationalization, allowing the yuan to be part of the SDR basket in the foreseeable future.” China is promoting the global usage of its currency as it seeks to liberalize domestic interest rates and open up capital markets. The yuan overtook Canada’s dollar to rank fifth for use in international payments in December, after passing the euro as the second-most used in trade finance in 2013………………………………………..Full Article: Source

IBM looking at adopting bitcoin technology for major currencies

Posted on 13 March 2015 by VRS  |  Email |Print

International Business Machines Corp is considering adopting the underlying technology behind bitcoin, known as the “blockchain,” to create a digital cash and payment system for major currencies, according to a person familiar with the matter.
The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, the person said. The transactions would be in an open ledger of a specific country’s currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorization to discuss the project in public………………………………………..Full Article: Source

Why the Dollar Rally Is Hurting Your Commodities

Posted on 12 March 2015 by VRS  |  Email |Print

During the past few trading days, it has become increasingly clear that the impending market volatility that I’ve been warning about lately has arrived. Here’s the long and short of what is happening with the market right now…
Any time the dollar rallies — it had a dramatic rally on Friday and another dramatic rally yesterday — the market pulls back because commodities (oil, gold, aluminum, etc.) are priced in U.S. dollars. So, when the dollar rallies, commodity prices — especially oil prices — fall. I recommend a handful of commodities-related stocks, and we’re seeing the strong dollar weigh on these stocks in the near-term………………………………………..Full Article: Source

Euro-dollar parity just a ‘matter of time’ as single currency plunges to 12-year low

Posted on 12 March 2015 by VRS  |  Email |Print

Single currency falls to 12 year low against the dollar, as analysts say parity is now inevitable. Euro-dollar parity is only a “matter of time”, analysts said on Wednesday, after the single currency fell to a fresh 12-year low against the greenback.
The euro dropped as low as $1.0560 against the dollar on Wednesday morning after Mario Draghi, the president of the European Central Bank (ECB), said policymakers had the will and the means to bring inflation back to the bank’s target of just below 2pc………………………………………..Full Article: Source

Currencies Gyrate, but There’s No War

Posted on 12 March 2015 by VRS  |  Email |Print

It’s not a currency war if everyone wins. The euro has fallen to near a 12-year low against the dollar this week since the European Central Bank began its long-awaited bond-buying program. The cheap euro is great for Europe: It bolsters exports and thus growth, and raises the price of imports, thereby warding off deflation.
Feelings are more mixed in the U.S. The greenback’s strength against the euro and a host of other currencies will trim U.S. growth, squeeze exports and make it harder for the Federal Reserve to get inflation back up to its 2% target………………………………………..Full Article: Source

China’s Plan for Winning the Currency Wars

Posted on 12 March 2015 by VRS  |  Email |Print

The currency wars are still rumbling on. Today, Thailand became at least the 21st country to cut interest rates so far this year, as everyone tries to make their currency cheaper than everyone else’s. The Federal Reserve still seems on track to raise rates in June, turbocharging the dollar. But there’s more than one way to win a battle.
You can inflict increasing damage on your opponent, which is what most of the world is doing to the U.S. Or you can gain territory — which is what China is doing as its currency steals more and more of the global market………………………………………..Full Article: Source

London copper turns lower as dollar firms up

Posted on 11 March 2015 by VRS  |  Email |Print

London copper sagged on Tuesday as a stronger dollar clipped the gains from short-covering in the previous session, while traders waited for signs of demand from China, the world’s top copper user, after last month’s long holiday.
The dollar scaled a near 12-year peak against the euro on Tuesday, as the underlying theme of monetary policy divergence held sway, making commodities more expensive for the holders of other currencies and exacerbating price pressure after soft trade data this week cast a shadow over metals demand………………………………………..Full Article: Source

Optimists see end for Brazil currency slide

Posted on 11 March 2015 by VRS  |  Email |Print

When Brazil’s central bank met in late January to consider increasing interest rates, it predicted the currency, the real, would hover at R$2.65 to the dollar for the next two years. On Monday, the currency closed at about R$3.12 against the dollar, near an 11-year low after weakening 15 per cent so far this year.
The once mighty real — only a few years ago Brazil was fighting a “currency war” to keep it from appreciating against the dollar — has been hit by a scandal at state-owned oil company Petrobras and a deep slowdown in Latin America’s largest economy………………………………………..Full Article: Source

Dollar rally has long way to go

Posted on 11 March 2015 by VRS  |  Email |Print

The dollar is flexing its muscles on the prospect of higher U.S. interest rates, and it may be only half way through a dramatic move that is jarring global currency, bond, commodity and stock markets.
The dollar index touched a new 12-year high Tuesday, and is now up 3.3 percent for the month of March. The yen slid against the greenback and the euro waffled, edging closer to parity at $1.07 against the dollar. Emerging market currencies also sold off, with the Mexican peso plumbing a new all-time low………………………………………..Full Article: Source

Brazilian real falls to 11-year low over risk to austerity plan

Posted on 10 March 2015 by VRS  |  Email |Print

Brazil’s real plunged to a near 11-year low on opening in São Paulo amid concerns that rising political risk could threaten President Dilma Rousseff’s fiscal austerity plan. The currency’s latest drop followed a tumultuous weekend in Brazilian politics in which a speech by President Dilma Rousseff seeking to convince her countrymen of the need for fiscal austerity provoked protests in major cities.
Meanwhile prosecutors launched investigations into a group of 54 senior political figures over a scandal at state oil producer Petrobras. “The hostility in Congress is getting worse by the day and it casts doubt on the planned fiscal adjustments,” said Silvio Campos Neto at Tendências Consultoria, a São Paulo-based consultancy………………………………………..Full Article: Source

Chinese currency manipulation not a problem

Posted on 10 March 2015 by VRS  |  Email |Print

America’s two political parties rarely agree, but one thing that unites them is their anger about ‘currency manipulation’, especially by China. Perhaps spurred by the recent appreciation of the dollar and the first signs that it is eroding net exports, congressional Democrats and Republicans are once again considering legislation to counter what they view as unfair currency undervaluation.
The proposed measures include countervailing duties against imports from offending countries, even though this would conflict with international trade rules. But this approach is misguided. Even if one accepts that it is possible to identify currency manipulation, China no longer qualifies………………………………………..Full Article: Source

Why It Matters If the Dollar Is the Reserve Currency

Posted on 09 March 2015 by VRS  |  Email |Print

We refer to the dollar as a “reserve currency” when referring to its use by other countries when settling their international trade accounts. For example, if Canada buys goods from China, China may prefer to be paid in US dollars rather than Canadian dollars. The US dollar is the more “marketable” money internationally, meaning that most countries will accept it in payment, so China can use its dollars to buy goods from other countries, not solely the US.
Such might not be the case with the Canadian dollar, and China would have to hold its Canadian dollars until it found something to buy from Canada. Multiply this scenario by all the countries of the world who print their own money and one can see that without a currency accepted widely in the world, international trade would slow down and become more expensive. In some ways, its effect would be similar to that of erecting trade barriers, such as the infamous Smoot-Hawley Tariff of 1930 that contributed to the Great Depression………………………………………..Full Article: Source

Venezuela’s Currency Circus

Posted on 09 March 2015 by VRS  |  Email |Print

In a faraway land, an eccentric king nailed an edict to the door of his palace that said: “Henceforth, $20 bills will be sold here for $1.” Within minutes, his subjects were clamoring for those cut-rate twenties. So the king posted a second edict: “Each $20 bill shall be used only to buy things abroad.” Then a third: “Whatever you buy abroad with your $20 you must sell in our kingdom for $2.”
“This will make me beloved!” he thought. “Foreign goods will be cheap for all.” But it didn’t work out that way. Soon, the lines for $20 bills were matched by lines at every store that sold foreign goods………………………………………..Full Article: Source

Inside the Currency Wars

Posted on 09 March 2015 by VRS  |  Email |Print

Almost all the world’s currencies are dropping against the U.S. dollar. The decline is being driven mostly by governments and central banks bent on cheapening their currencies to gain an advantage in global trade and boost their weak economies.
Since December, 22 major foreign currencies have declined an average of 4.5 percent against the greenback. A cheaper currency makes exports less expensive and thus more attractive to foreign buyers. A devalued currency also drives up import prices, which discourage domestic consumers from purchasing foreign goods………………………………………..Full Article: Source

Why this top-performing currency may falter

Posted on 06 March 2015 by VRS  |  Email |Print

Thailand’s baht has surprised markets by becoming one of the world’s best performing currencies over the past year despite the country’s political turmoil, but that could soon change, analysts said.
“The strength of the baht has been puzzling coming as it has against a backdrop of political uncertainty, cyclical underperformance, looser monetary policy, the promise of easier fiscal policy and a strong dollar,” Jonathan Sequeira, an analyst at Goldman Sachs, said in a note Tuesday………………………………………..Full Article: Source

Currency is key to Venezuela’s great escape

Posted on 06 March 2015 by VRS  |  Email |Print

Venezuela is teetering on the brink of a crisis that only uncharacteristically radical reform can remedy. There has been no shortage of oil price talk in recent months – and no shortage of oil for that matter. Every week it seems a new low cost record is broken, and whereas a barrel of Brent last year clocked in at over $100, you can take one home today for approximately $50.
Consumers meanwhile, are glad of the pennies saved at the pump and some countries have responded to this new low cost environment by recouping some of the money lost to subsidies in years passed. However, for the members of OPEC, whose finances rely on black gold, the storm clouds show no signs of parting, and pressure is mounting on recession-hit Venezuela to rethink its reliance on oil and its restrictive currency controls………………………………………..Full Article: Source

Swiss government has not asked for new currency cap-spokesman

Posted on 05 March 2015 by VRS  |  Email |Print

The Swiss government has not asked its central bank to introduce a new cap on the value of the Swiss franc, a spokesman for the government said on Wednesday, after a Swiss newspaper reported that two ministers had suggested such a move.
Switzerland’s central bank stunned financial markets on Jan. 15 when it ended its cap on the value of the franc against the euro, stoking fears for the export-reliant Swiss economy. The Swiss National Bank (SNB) is independent of the government in its monetary policy decision making………………………………………..Full Article: Source

US Bank Regulator: Virtual Currencies Could Be ‘Revolutionary’

Posted on 05 March 2015 by VRS  |  Email |Print

The head of an independent US agency within the US Treasury that supervises national banks has issued new statements on virtual currencies and their “potentially revolutionary” impact on banking.
Speaking before the Institute of International Bankers this week, the head of the Office of the Comptroller of the Currency (OCC) Thomas J Curry discussed virtual currency as part of a speech aimed at addressing the Bank Secrecy Act (BSA) and its ability to adapt to new innovations………………………………………..Full Article: Source

Denmark Intervenes in Currency Market in a Big Way

Posted on 04 March 2015 by VRS  |  Email |Print

Denmark’s central bank bought a record amount of foreign currency last month in a bid to protect the krone’s peg to the euro, underscoring the fallout from the European Central Bank’s efforts to boost economic growth.
The Nationalbanken’s net purchases of foreign exchange amounted to 168.7 billion Danish kroner ($25.32 billion) in February, equal to about 9% of the Nordic country’s gross domestic product. The scale of the intervention was a record for Denmark’s central bank, which also made significant net purchases of foreign currency the previous month……………………………………….Full Article: Source

Commodity Currencies Gain After Australia Refrains From Rate Cut

Posted on 04 March 2015 by VRS  |  Email |Print

The Australian dollar led currencies of commodity-producing countries higher after the nation’s central bank refrained from a second interest-rate cut in as many months. Canada’s dollar rose the most in two weeks after a report showed fourth-quarter gross domestic product grew more than forecast, as policy makers prepared to meet Wednesday.
The Aussie gained versus most major peers after the Reserve Bank of Australia unexpectedly left the cash rate at a record-low 2.25 percent. New Zealand’s dollar rose, while Russia’s ruble led emerging-market currencies higher……………………………………….Full Article: Source

Has Azerbaijan’s National Currency Run Away Scared?

Posted on 03 March 2015 by VRS  |  Email |Print

Since independence Azerbaijan’s kleptocratic Aliyev regime has chased away independent media, political opposition and civil society. Throughout all these repressions, only one thing stood firm by the ruling family’s side as a symbol of the “stability” that President Ilham Aliyev, son of the country’s first president, Heydar, never tires of boasting about on Twitter: the country’s national currency, the manat.
Until recently, that is. Unable to withstand the slumping oil prices that have struck the country’s resource-based economy and the economic crisis across the Caspian in Russia, Azerbaijan’s Central Bank devalued Azerbaijan’s the manat by 33.5 percent to the dollar and by 30 percent to the euro last month………………………………………..Full Article: Source

As currency war erupts, buy American

Posted on 03 March 2015 by VRS  |  Email |Print

The U.S. economy is facing a predicament the Federal Reserve didn’t anticipate — a stronger than expected U.S. dollar. While a strong dollar is great in theory because it reduces the cost of foreign goods for American consumers (including commodities like oil), the stronger currency will have negative consequences for corporate earnings and the markets.
This month, Europe will take a page out of Fed Chair Janet Yellen’s and her predecessor Ben Bernanke’s playbook and begin its own round of aggressive bond buying, known as Quantitative Easing. QE is designed to help stimulate growth. By effectively pumping more euros into the monetary system, QE should cause the value of the euro to continue falling vs. the U.S. dollar. The expectation is that a declining euro makes European goods cheaper and more competitive — but, at what price to the USA?……………………………………….Full Article: Source

China has joined the currency wars

Posted on 02 March 2015 by VRS  |  Email |Print

The Chinese rate cut over the weekend is, ostensibly aimed at shoring up “fundamental trends in growth, inflation and employment.” But like other central banks around the world the PBOC has another, unstated, goal in its recent RRR and rate cuts.
That goal is a continued weakening of the Renminbi. Having bottomed around 6.1076 just before the first PBOC cut last November the USDCNY rate is back at 6.2686 (higher means Chinese Renmimbi weaker)………………………………………..Full Article: Source

Emerging-Market Currencies Tumble on Growth, Stimulus Prospects

Posted on 02 March 2015 by VRS  |  Email |Print

Currencies in some of the world’s biggest emerging markets tumbled Friday, as investors fret over slowing economies and signals that central banks are willing to take extra stimulus measures to juice up growth.
In Asia, China’s yuan fell to the weakest level against the U.S. dollar in more than two years while Indonesia’s rupiah hit the weakest point in more than 16 years. Elsewhere, Turkey’s lira slumped to a record low in early New York trading, while Brazil’s real touched the weakest level in more than a decade before reversing the losses………………………………………..Full Article: Source

Ecuador launches new digital currency – but most residents know little about it

Posted on 27 February 2015 by VRS  |  Email |Print

Bill passed last July gives Central Bank authority to create digital dollars, but opinions divided along party lines amid concerns of a presidential power grab. The new system, which is officially set to launch on Thursday, will work much like mobile phone bank payments in other countries: users will be able to exchange hard cash for digital money which is stored in an electronic wallet on their phones.
As with other mobile payment programmes, text messages will allow users to make payments to other accounts, but what makes this plan different is that this is the first time a national government will have full control; everything from the creation of new units to securing the system against attack will be managed by the Central Bank of Ecuador………………………………………..Full Article: Source

Ukraine Dials Back on Latest Attempt to Halt Currency Free Fall

Posted on 27 February 2015 by VRS  |  Email |Print

Ukraine’s central bank abruptly reversed a broad ban on foreign-currency purchases Thursday, a day after imposing the measures in an attempt to halt the hryvnia’s free fall. Prime Minister Arseniy Yatsenyuk had criticized the earlier decision as bad for Ukraine’s economy, which is staggering after nearly a year of fighting with Russia-backed separatists in the east of the country.
Although a cease-fire signed Feb. 12 appeared to be taking hold this week, government coffers in Kiev have been drained, inflation has soared and a fight with Moscow over natural-gas payments has been exacerbated………………………………………..Full Article: Source

Currency Manipulation: Why Something Must Be Done

Posted on 26 February 2015 by VRS  |  Email |Print

Currency manipulation occurs when countries sell their own currencies in the foreign exchange markets, usually against dollars, to keep their exchange rates weak and the dollar strong. These countries thereby subsidize their exports and raise the price of their imports, sometimes by as much as 30-40%.
They strengthen their international competitive positions, increase their trade surpluses and generate domestic production and employment at the expense of the United States and others. About 20 countries, most notably China, have engaged in such practices over the past decade at an annual rate that has averaged $1 trillion in recent years. The U.S. trade deficit has been several hundred billion dollars a year higher as a result and we lost several million additional jobs during the Great Recession………………………………………..Full Article: Source

Why There Are No Winners in the Global Currency War (Video)

Posted on 25 February 2015 by VRS  |  Email |Print

In a world where growth is scarce and prospects aren’t improving, an unspoken currency war has broken out. The short term pay-off might be a boost in exports, but, according to Bloomberg View’s Mark Gilbert, there can be no real winners in the end.……………………………………….Full Article: Source

Yellen says no to currency provisions in trade deals

Posted on 25 February 2015 by VRS  |  Email |Print

Federal Reserve Chairwoman Janet Yellen told lawmakers on Tuesday that she would have a significant problem with adding currency manipulation provisions into global trade agreements. Yellen said monetary policy decisions — such as the massive stimulus programs at the Fed since the 2008 financial crisis — can affect currency exchange rates but don’t amount to currency manipulation.
“I think currency manipulation that is undertaken in order to alter the competitive landscape and give one country an advantage in international trade is inappropriate and needs to be addressed,” she told the Senate Banking Committee where she presented the semiannual monetary policy report………………………………………..Full Article: Source

Asia’s Looming Currency War?

Posted on 24 February 2015 by VRS  |  Email |Print

Central banks are not waging a currency war. Their actions, which may seem warlike on the surface, arise from far more benign motives. Many Central Banks have mandated inflation targets, and in most regions inflation is below target. With a slowing global economy, there had been few ways to keep inflation up to code.
But a turn in U.S. monetary policy has made it possible for Central Banks to meet their policy goals by reflating their domestic economies. Part of the issue is that the central banks who have missed their goals are the global economic heavyweights, whose policy shifts have a more potent effect on global markets than others. Europe is struggling with high unemployment, deflation, and a Greek epic with seemingly no end………………………………………..Full Article: Source

Ukraine’s national currency plummets

Posted on 24 February 2015 by VRS  |  Email |Print

Ukraine’s battered national currency has plummeted some 10 per cent as the central bank scrambles to strengthen currency controls in its latest bid to halt the slide. The average rate for the hryvnia - currently the worst performing currency in the world - tumbled to 30.55 before nudging back up slightly to 29.56 by 1500 GMT (0200 AEDT Tuesday)
The hryvnia lost some 50 per cent of its value in 2014 as east Ukraine collapsed into conflict following the ouster of pro-Russian president Viktor Yanukovych last February. The pain has continued with the currency plunging even faster since the start of the year as fierce fighting flared again in the eastern industrial heartland. ……………………………………….Full Article: Source

Aust dollar hit by US dollar strength

Posted on 24 February 2015 by VRS  |  Email |Print

The Australian dollar is back below US78c as commodity prices fall and the US dollar bounces back from last week’s fall. At 7am (AEDT), the local unit was trading at US77.97c, down from US78.36c on Monday.
OM Financial senior client adviser Stuart Ive said the US dollar fared well despite new data showing that US sales of existing homes tumbled 4.9 per cent in January. “A stronger US dollar means weaker commodity prices and that’s really what is weighing on the Australian dollar for the time being,” he said………………………………………..Full Article: Source

Azerbaijan devalues currency by one-third amid oil price tumble

Posted on 23 February 2015 by VRS  |  Email |Print

Azerbaijan devalued its currency by a third over the weekend in a surprise move that laid bare the damage the oil price tumble has wrought on major energy-exporting economies. The devaluation marked an embarrassing about-face for the Azerbaijani government, which had for months insisted it would maintain the stability of its currency in the face of falling oil prices and major devaluations in neighbours Russia, Georgia and Turkey.
In a curt statement, the central bank said the decision to devalue the currency by 34 per cent to 1.05 manats per dollar was made “in order to support diversification of Azerbaijan’s economy, strengthen its international compatibility and export potential as well as to provide balance of payments sustainability”………………………………………..Full Article: Source

Can a Bitcoin-style virtual currency solve the Greek financial crisis?

Posted on 23 February 2015 by VRS  |  Email |Print

There’s almost no upside to a eurocrisis. You become part of a rolling maul of politicians, journalists and economists ripping and gouging at each other, both in private and on Twitter. The only advantage of being there is that it forces you to think laterally about money.
Soon – if the Greek crisis is not resolved – one of the most audacious pieces of lateral thinking ever could get a try-out: a parallel digital currency, issued by the Greek government, modelled on Bitcoin, but with a crucial difference………………………………………..Full Article: Source

China calls the shots in Asia’s currency war

Posted on 23 February 2015 by VRS  |  Email |Print

As fears of a global currency war grow, all eyes in Asia are on whether China will devalue its currency to avert a sharper economic slowdown. The urgency with which Asian central banks are cutting interest rates is an indication of not just the deflationary forces they are seeing but also recognition that if China weakens the yuan, their policy options will be severely limited.
Indonesia was the latest to surprise investors on Tuesday with a rate cut, joining Singapore, India and China, all of whom have unexpectedly eased policy this year to spur growth………………………………………..Full Article: Source

China’s exchange-rate policy: Currency peace

Posted on 20 February 2015 by VRS  |  Email |Print

Devaluing the yuan would do China more harm than good. Chinese officials tired of defending their exchange-rate policy can at least appreciate the irony in the latest charges levelled against them. For years foreigners accused them of keeping the yuan artificially weak to boost exports. Now, domestic critics say, they are doing just the opposite: keeping the currency artificially strong and, in the process, wounding the economy.
Some predict China will soon change course and engineer a devaluation. But just as the Chinese authorities did not resort to a big one-off appreciation when the yuan seemed too weak, they are unlikely to embark on a dramatic devaluation now that it is looking strong………………………………………..Full Article: Source

Did the Fed just enter the currency wars?

Posted on 20 February 2015 by VRS  |  Email |Print

The minutes from the Federal Reserve’s meeting last month have foreign-exchange traders wondering whether Janet Yellen has joined the currency wars. Policymakers pointed to the dollar’s rising value as “a persistent source of restraint” on exports in a surprisingly dovish set of minutes published Wednesday. The greenback fell against a broad group of its peers.
Central bankers from Europe to Australia have engaged this year in bouts of rate-cutting oneupmanship, leaving the U.S., and possibly Britain, as the only developed nations seen as likely to raise borrowing costs in 2015. The dollar climbed to its strongest in more than a decade as a result, prompting billionaire Warren Buffett and Goldman Sachs Group Inc. President Gary Cohn to question whether the Fed can now increase rates without damaging the U.S. economy………………………………………..Full Article: Source

Ultimately everyone loses in a currency war

Posted on 20 February 2015 by VRS  |  Email |Print

Pity the prudent Canadian saver. As she seeks a safe place to park spare cash and build a nest egg for retirement, the pickings are increasingly slim. At the peak of RRSP season, most banks are offering barely 1.5 per cent on once reliable five-year guaranteed investment certificates.
Canadian savers are better off than the Danes or Swedes, however. What was once thought a technical impossibility – negative interest rates – have become the norm in Scandinavia. If you buy a short-term deposit certificate in Sweden these days, you’ll get back less than you invested………………………………………..Full Article: Source

China calls the shots in Asia’s currency war

Posted on 19 February 2015 by VRS  |  Email |Print

As fears of a global currency war grow, all eyes in Asia are on whether China will devalue its currency to avert a sharper economic slowdown. The urgency with which Asian central banks are cutting interest rates is an indication of not just the deflationary forces they are seeing but also recognition that if China weakens the yuan, their policy options will be severely limited.
Indonesia was the latest to surprise investors on Tuesday with a rate cut, joining Singapore, India and China, all of whom have unexpectedly eased policy this year to spur growth. Bank Indonesia’s rate cut was in some ways a reminder of how critical China’s yuan is to the region’s policy making………………………………………..Full Article: Source

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