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Commodities Briefing - Category | Currencies more

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

Bernanke: China’s yuan isn’t ready for world stage

Posted on 03 June 2015 by VRS  |  Email |Print

China’s yuan isn’t yet ready for the world stage, despite Beijing’s big push to turn it into an international reserve currency, according to former Federal Reserve Chairman Ben Bernanke.
Doing so “involves more than just being a strong economy,” Bernanke said in Hong Kong on Tuesday. “To move in that direction, China will have to continue to liberalize its capital account, current trading regimes, and strengthen and deepen its bond markets and other asset markets.”……………………………………….Full Article: Source

Need to move towards plastic currency, says Indian Finance Minister

Posted on 03 June 2015 by VRS  |  Email |Print

Finance Minister Arun Jaitley today made a case for greater use of plastic currency even as he stressed that development of new facilities at Hoshangabad and Mysore would help in reducing reliance on imports for printing of currency notes.
“The developed world has moved substantially to plastic currency and payment gateways. I think there is need for India and our determination is there to gradually take steps to move in that direction,” he said. Jaitley was speaking at a conference on ‘Make in India - Indigenisation of Currency’ here. The minister said that the country needed to get rid of “obsolete methodologies” and catch up with the technologies of future to promote industrialisation and create jobs………………………………………..Full Article: Source

China’s yuan has ‘Long March’ to reserve-currency status

Posted on 03 June 2015 by VRS  |  Email |Print

China’s latest progress on getting the yuan accepted as a reserve currency has focused attention on the big payoff: that eventually investors and central banks will load up on trillions of yuan-denominated equities and bonds. But has Beijing really got the nerve to also proceed with the dangerous process of capital-account opening that this requires?
The Goldilocks scenario sees a fresh fund infusion driving Shanghai’s soaring equity markets even higher and delivering a much needed capital boost to China’s debt-burdened industry. But it could also turn into a bad dream. Some analysts warn that if the opening of the capital account is mishandled, it risks triggering a systematic financial crisis………………………………………..Full Article: Source

Can Anyone Match WisdomTree in Currency-Hedged ETFs?

Posted on 02 June 2015 by VRS  |  Email |Print

The second quarter saw a weak start no doubt in the U.S. weighing on the dollar. But the resilient U.S. dollar resumed its strength over the past couple of weeks thanks to the Fed rate hike bets. In fact, the U.S. Dollar Index rose nearly 4% in the same period, erasing most of the spring losses. The surge in the greenback brought back the appeal for currency hedged ETFs and this trend is likely to continue in the summer months.
This is especially true as a raft of upbeat economic data of late and an accelerating job market indicate that the world’s largest economy is improving after the first-quarter slump. If this continues, the Fed might finally increase the interest rates for the first time since 2006, albeit at a slower pace………………………………..Full Article: Source

How to cash in on this year’s big currency trend

Posted on 02 June 2015 by VRS  |  Email |Print

The U.S. dollar index is finding upside again after taking a 2½-month break from its big rally. And technical analyst Craig Johnson says he expects big gains for the greenback.
“Ultimately what I see happening with a little bit of weakness over the last several weeks here is really just a pullback in what we believe is a longer-term uptrend in the dollar,” said Johnson, senior technical research analyst at Piper Jaffray and president of the Market Technicians Association………………………………..Full Article: Source

How Chinese currency came in from the cold

Posted on 01 June 2015 by VRS  |  Email |Print

China currency is “no longer undervalued,” says the IMF.Undervalued, overvalued. Is it just me, or can nobody agree on the true value of the Chinese currency? There are many conflicting views. For now, the renminbi is akin to beauty: in some respects its value still lies in the eye of the beholder.
OK - but what’s behind the International Monetary Fund’s change of heart? For years, China’s currency was deemed to be undervalued because its “ external position” looked obviously unbalanced. The evidence for this was the country’s gigantic current account surpluses and accumulation of foreign exchange reserves. Economically, the theory goes, a country’s exchange rate has a meaningful influence on a country’s external position………………………………….Full Article: Source

G7 welcomes renminbi to join IMF’s currency basket

Posted on 01 June 2015 by VRS  |  Email |Print

German finance minister Wolfgang Schaeuble said on Friday that finance ministers and central bank chiefs from the G7 countries welcomed the inclusion of the Chinese yuan or renminbi in IMF’s Special Drawing Rights (SDR) currency basket.
“There was an agreement that we would welcome such an addition in principle as long as it is in line with the existing criteria. There are no divergent views on this,” said Schaeuble at a press conference in Dresden after ministers and central bankers from the seven leading industrialized countries concluded their three-day meeting in the eastern German city………………………………….Full Article: Source

Stop Calling China a Currency Manipulator

Posted on 29 May 2015 by VRS  |  Email |Print

Christine Lagarde’s people say China’s currency is no longer undervalued. Jacob Lew’s argue it still is. There’s a lot at stake in the debate: The yuan can’t gain status as a global currency reserve if China is thought to be manipulating its value. So who should we believe, the head of the International Monetary Fund or the U.S. Treasury Secretary?
It’s worth asking Ben Bernanke. Now that the former Federal Reserve chairman is in the private sector, he can say what he really thinks — and, as he pointed out in a recent speech in Seoul, it’s not wise to ignore political factors when managing the rise of the Chinese economy…………………………………Full Article: Source

Citi Urges UK Government to Create its Own Digital Currency

Posted on 29 May 2015 by VRS  |  Email |Print

Around the same time as Accenture’s call for the UK government to regulate bitcoin wallets, Citi suggested that officials should look into creating their own digital currency. This has been revealed in the Treasury’s release of a document entitled “Digital Currencies: Response to the Call for Information”.
This report summarizes all the submissions received by the government after it urged the public to assist them in understanding the workings of the digital currency industry. The Treasury received more than 120 responses and has outlined the proposals and the government’s next steps…………………………………Full Article: Source

Currency hedging: Does it still work?

Posted on 28 May 2015 by VRS  |  Email |Print

Hedging the euro and the yen has amplified returns for Japan and Europe investors in recent years, but will the trend continue? Over most timeframes, UK investors in Japan and Europe who have hedged the yen and euro have reaped stronger returns.
In the last year, three years and five years, the picture has been the same: of the pound strengthening against those currencies, and chipping away at the returns of those with unhedged exposure. With central banks in both Japan and Europe printing more money to buy bonds to boost their economies - known as ‘quantitative easing’ - many investors are betting that trend will continue…………………………………….Full Article: Source

Russia’s Currency Splash Has Economists Saying Ruble Rally Tamed

Posted on 28 May 2015 by VRS  |  Email |Print

Foreign-currency purchases by Russia’s central bank will put a stop to the ruble’s world-beating rally, according to a Bloomberg survey of economists. Buying as much as $200 million a day to replenish reserves will halt gains in the ruble, 19 of 28 economists said. While reserves may swell to $380 billion this year, they’ll stay below the level they were when Russia annexed Crimea last March, a median of 25 estimates showed.
“The central bank has been putting the brakes on the ruble,” said Gunter Deuber, an analyst at Raiffeisen Bank International AG in Vienna. “The plan isn’t enough in volume terms to turn around the ruble FX market. However, it’s a strong signal to FX market participants that the central bank sees enough ruble appreciation for the time being.”……………………………………Full Article: Source

Renminbi tops currency usage table for China’s trade with Asia

Posted on 28 May 2015 by VRS  |  Email |Print

China’s renminbi has become the main currency for payments between China and the rest of the Asia-Pacific region, more than tripling in use over the past three years and outstripping the Japanese yen, the US dollar and the Hong Kong dollar in the process, according to data from the clearing system, Swift.
The shift demonstrates that the Asia-Pacific region is at the forefront of the renminbi’s gathering acceptance as a currency for international trade settlement and investment. The Chinese currency was used in January-April for 31 per cent of payments between China (including Hong Kong) and the rest of the Asia-Pacific region, up from 7 per cent back in April 2012, Swift said…………………………………….Full Article: Source

Dollar rise hits commodity prices

Posted on 27 May 2015 by VRS  |  Email |Print

Commodity prices felt the impact of a jump in the dollar to a four-week high, with oil, gold and wheat prices leading the decline. ICE July Brent, the international oil marker, fell more than 2.5 per cent to a low for the month below $64 a barrel. Gold fell almost 2 per cent to a two-week low of $1,185.35 a troy ounce, while CBOT July wheat fell more than 3 per cent.
The US currency has strengthened since comments by Janet Yellen, Federal Reserve chairwoman, on economic growth last week. The dollar index rose more than 1 per cent on Tuesday, with further support coming from better than forecast US consumer confidence data…………………………………..Full Article: Source

China’s yuan currency ‘no longer undervalued’: IMF

Posted on 27 May 2015 by VRS  |  Email |Print

China’s yuan currency, which Washington has long alleged was manipulated, is “no longer undervalued,” the International Monetary Fund said. “Our assessment now is that the substantial real effective appreciation over the past year has brought the exchange rate to a level that is no longer undervalued,” the IMF said in a statement after a consultation mission to China.
The value of the yuan, also known as the renminbi, has been a source of tension for years with China’s major trade partners — led by Washington — accusing Beijing of keeping it artificially low to give Chinese exporters an unfair competitive advantage, which Beijing denied. China keeps a tight grip on the value of the yuan out of concerns that unpredictable currency inflows and outflows could harm the economy and weaken its financial control…………………………………..Full Article: Source

Venezuela’s Currency Just Collapsed 30% on the Black Market

Posted on 27 May 2015 by VRS  |  Email |Print

The stunning collapse of Venezuela’s bolivar in black market trading this month — it fell to as low as 423 bolivars per dollar from 279 at the start of the month — has left Venezuelans scratching their heads, with many wondering why it has sunk below the value of gold and hard currency the central bank has to back it.
Venezuela has maintained strict currency controls since 2003 and currently has three legal exchange rates of 6.3, 12 and 199 bolivars per dollar used for priority imports…………………………………..Full Article: Source

Bernanke Says Currency Mismatch a Risk for China Policy Makers

Posted on 26 May 2015 by VRS  |  Email |Print

China needs to create deep and liquid markets to avoid currency risks as it makes the yuan a convertible currency, former Federal Reserve Chairman Ben S. Bernanke said in Shanghai.
“China needs to avoid currency mismatch as it opens its capital account,” Bernanke said at a speech at the Shanghai Forum on Monday. “For a currency to be internationally traded, what you need most is liquid markets. A deep market means people can get their money out.”……………………………………….Full Article: Source

China and Chile sign currency swap agreement

Posted on 26 May 2015 by VRS  |  Email |Print

China’s Prime Minister Li Keqiang and Chilean President Michelle Bachelet signed a currency swap deal seeking to deepen economic ties by boosting trade and investment. The currency swap agreement between Chile’s central bank and the People’s Bank of China was announced yesterday. It eases the exchange of up to 2.2 trillion pesos (about USD 3.6 billion) for the next three years.
China has signed currency swap deals with several countries and has worked with financial centers to develop international hubs for offshore trading of the currency………………………………………..Full Article: Source

RBA Winning Room to Weaken Currency as Banks Act to Cool Housing

Posted on 25 May 2015 by VRS  |  Email |Print

The Reserve Bank of Australia is set to win more room to weaken its currency after lenders started doing their bit to cool the housing market. Australia & New Zealand Banking Group Ltd. said last week it will stop giving discounts on mortgage rates to investors, while National Australia Bank Ltd. also said it would respond to calls from regulators and limit such offers.
The RBA’s monetary easing has added fuel to a property boom, with house prices in Sydney rising about 40 percent over the past three years. While the central bank says the economy needs a weaker exchange rate, the Aussie has climbed 2.2 percent in the past month against the greenback even after the RBA cut its cash rate to a record low 2 percent………………………………………..Full Article: Source

Belarus Eases Currency Controls as Market Stabilizes

Posted on 25 May 2015 by VRS  |  Email |Print

The Belarussian central bank will lift a ban on trading currency outside the official currency exchange, it said in a statement Friday, as it seeks to ease restrictions on the financial and currency markets. The ban was introduced last year along with other currency controls, as the bank sought to protect the Belarussian ruble from economic turmoil in neighboring Russia prompted by sliding oil prices and Western economic sanctions.
Belarus’ currency has stabilized since weakening 25 percent against the dollar at the start of the year, and the central bank has eased the majority of its restrictions, including cutting the rate of mandatory sales of foreign currency income to 30 percent from 40 percent………………………………………..Full Article: Source

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

Posted on 22 May 2015 by VRS  |  Email |Print

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

Where Are Oil Prices and the Ruble Going Next?

Posted on 21 May 2015 by VRS  |  Email |Print

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

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

Posted on 21 May 2015 by VRS  |  Email |Print

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

Compromise floated on currency rules in U.S. Senate

Posted on 21 May 2015 by VRS  |  Email |Print

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

Commodities Rally Hit by Stronger Dollar

Posted on 20 May 2015 by VRS  |  Email |Print

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

Ruble Rebound Prompts Currency Purchases by Finance Ministry

Posted on 20 May 2015 by VRS  |  Email |Print

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

Debate Over Currency Cheating Intensifies in Trade Talks

Posted on 20 May 2015 by VRS  |  Email |Print

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

Asian currencies tripped up by global bond rout

Posted on 19 May 2015 by VRS  |  Email |Print

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

Poll: Which EM currency would you buy?

Posted on 19 May 2015 by VRS  |  Email |Print

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

Weak dollar boosts bullion

Posted on 18 May 2015 by VRS  |  Email |Print

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

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

Posted on 18 May 2015 by VRS  |  Email |Print

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

Digital currencies: A gold standard for bitcoin

Posted on 18 May 2015 by VRS  |  Email |Print

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

Russia Rebuilding Foreign Currency Reserves

Posted on 15 May 2015 by VRS  |  Email |Print

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

Senate passes bill targeting currency manipulators

Posted on 15 May 2015 by VRS  |  Email |Print

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

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

Posted on 13 May 2015 by VRS  |  Email |Print

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

Will China Join a Global Currency War?

Posted on 13 May 2015 by VRS  |  Email |Print

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

China Adopts IMF Accounting Practice in Reserve-Currency Push

Posted on 13 May 2015 by VRS  |  Email |Print

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

China’s Currency Trap

Posted on 12 May 2015 by VRS  |  Email |Print

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

70 currency union breakups offer Greece hope

Posted on 12 May 2015 by VRS  |  Email |Print

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

Convertibility: A global view

Posted on 11 May 2015 by VRS  |  Email |Print

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

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

Posted on 11 May 2015 by VRS  |  Email |Print

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

Currencies languish at lifetime lows

Posted on 11 May 2015 by VRS  |  Email |Print

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

Greece could use ‘parallel currency’ as desperation grows

Posted on 08 May 2015 by VRS  |  Email |Print

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

IMF calls on China to allow greater currency flexibility

Posted on 08 May 2015 by VRS  |  Email |Print

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

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

Posted on 07 May 2015 by VRS  |  Email |Print

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

Commodities, RBA, help prop up Australian dollar

Posted on 07 May 2015 by VRS  |  Email |Print

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

Fate of commodities is linked to dollar

Posted on 06 May 2015 by VRS  |  Email |Print

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

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