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Sorry China, The Yuan Still Has Ways To Go Before Replacing The Dollar

Posted on 03 December 2015 by VRS  |  Email |Print

There is growing expectation that the International Monetary Fund’s inclusion of China’s Renmimbi (RMB) in its basket of reserve used by the central banks of IMF members for Special Drawing Rights (SDR) represents a watershed moment in global finance and even China’s emergence as an economic superpower.
Such speculation is seductive but incorrect. The reality is much less than that. The RMB is a long way away from replacing the U.S. dollar as a genuine global currency, and is not yet even close to being a match for the Euro, British pound or Japanese Yen for that matter. The decision by the IMF will offer China some of the global prestige that it craves, but little by way of any real avenues of financial leverage or power that the country did not have before………………………………………..Full Article: Source

Watch Out China: A Reserve Currency Brings Boom and Busts

Posted on 02 December 2015 by VRS  |  Email |Print

A big shift in currency markets is afoot now that the International Monetary Fund has decided to add the Chinese renminbi — commonly known as the yuan — to its Special Drawing Rights list of currencies. That means that the IMF approves of countries holding yuan as foreign-exchange reserves.
The other currencies on the list are the U.S. dollar, British pound, Japanese yen and the euro, so the yuan is joining a pretty elite group. The IMF’s decision doesn’t have official regulatory implications — being on the Special Drawing Rights list doesn’t actually give you any special rights………………………………………..Full Article: Source

China leaves India trailing in race for reserve currency status

Posted on 02 December 2015 by VRS  |  Email |Print

China’s accession to the International Monetary Fund’s elite has left behind India, whose cautious approach to liberalisation means the rupee is unlikely to be a viable candidate for reserve currency status for at least a decade.
China has campaigned hard for inclusion in the benchmark currency basket, and the IMF’s announcement on Monday that the yuan had been added was recognition of its global power status. Beijing has introduced a flurry reforms to ensure the yuan was considered “freely usable” in IMF parlance, meaning widely used in international transactions and commonly traded………………………………………..Full Article: Source

Currency Hedged ETFs Are Not All The Same

Posted on 01 December 2015 by VRS  |  Email |Print

Currency fluctuations can be problematic for investors. If not hedged properly, gains in one part of a portfolio can be lost by the down cycles within currency values in another part of the portfolio. Investors in the US, for example, see this issue all the time with global or non-US investments eating into profit that had been realized at the US dollar level.
Exchange Traded Funds (ETFs) often use certain tactics to help investors reduce foreign exchange risk and provide an offsetting short position in the foreign currency to match the total notional principal of the underlying portfolio, typically through the use of a forward or a futures contract. A forward allows an investor to lock in the price of a currency today, regardless of fluctuations………………………………………..Full Article: Source

Hedge Funds Raise Bets on Dollar Gains for Fifth Straight Week

Posted on 01 December 2015 by VRS  |  Email |Print

Bets on further appreciation versus eight major peers outweighed those on a slump by a net 428,298 contracts in the week through Nov. 24, according to a release from the Commodity Futures Trading Commission. That’s up from 411,208 contracts a week earlier.
Speculators are seeking to capitalize on any dollar strength that stems from an increase in U.S. interest rates next month. The Fed will consider whether it’s appropriate to raise rates from near zero, where they’ve been since 2008, when it meets Dec. 15-16. That contrasts with a wave of easing elsewhere that will likely see the European Central Bank add stimulus on Dec. 3………………………………………..Full Article: Source

The Chinese renminbi joins the IMF’s reserve-currency basket

Posted on 01 December 2015 by VRS  |  Email |Print

Passing through the Suez Canal became easier earlier this year, thanks to an expansion completed in August. Now it is about to become a little bit more complicated. Transit fees for the canal are denominated in Special Drawing Rights, a basket of currencies used by the International Monetary Fund (IMF) as its unit of account.
Today the IMF decided to include the yuan in the basket from next year, joining the dollar, the euro, the pound and the yen. If lots of things were priced in SDRs, the IMF’s decision would have forced companies around the world to buy yuan-denominated assets as soon as possible, to hedge their exposure. That would have prompted China’s currency to strengthen dramatically. But few goods or services are priced in SDRs………………………………………..Full Article: Source

Euro looks like it has further to fall

Posted on 01 December 2015 by VRS  |  Email |Print

Short of hiring a small aircraft and trailing a banner reading “Sell euros, buy dollars!” across the skies of Docklands, there’s little more that policymakers in Frankfurt and Washington could do to make the case.
And yet, trading the two currencies against each other remains a tricky task. Depending on who you talk to, the trade is either too popular, or not popular enough. European Central Bank president Mario Draghi has cranked up the volume by saying any further easing this week would aim not only to prop up inflation, but to drag it up towards the official target “as quickly as possible”………………………………………..Full Article: Source

Commodities set to tumble if yuan gains benchmark SDR status

Posted on 30 November 2015 by VRS  |  Email |Print

Markets are betting that China’s currency is headed for another fall with commodity markets likely to suffer collateral damage. The International Monetary Fund board meets today to consider whether to include the yuan in the basket of currencies that makes up the fund’s benchmark currency called Special Drawing Rights.
It is expected to award it the status that the People’s Bank of China has been seeking, symbolising China’s emer­gence as a global financial power. The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case………………………………………..Full Article: Source

Australian dollar prompts gold miners to dig deep despite price drop

Posted on 30 November 2015 by VRS  |  Email |Print

Gold miners in Australia, emboldened by a weakening currency, have been increasing production in the face of a global rout in the precious metal, figures released on Sunday showed. Output by the world’s No.2 producer behind China climbed to 72 tonnes in the third quarter, up 1 per cent up on the previous quarter and 2 per cent higher than the same period a year ago, according to a survey by sector consultants Surbiton Associates.
“The declining value of the Australian dollar has once again been the great saviour of our gold sector and of the local resources industry in general,” Surbiton director Sandra Close said………………………………………..Full Article: Source

IMF to make Chinese yuan reserve currency in historic move

Posted on 30 November 2015 by VRS  |  Email |Print

The International Monetary Fund is to give the yuan a historic vote of confidence on Monday when it includes the Chinese currency in its elite club of major currencies. The yuan, also known as the renminbi, is widely expected to be added to the IMF’s group of international reserve currencies after an IMF meeting held by its managing director Christine Lagarde.
It comes after lengthy efforts by Chinese officials to legitimise the yuan, which critics say has been kept artificially cheap to artificially boost exports in the world’s second-largest economy. China has lobbied hard for the currency to be included in the list, which at present is made up of just the dollar, the euro, the pound and the Japanese yen. The list has not been altered since 2000, when the euro replace the franc and deutschmark………………………………………..Full Article: Source

Did the Yuan Really Pass the IMF Currency Test? You’ll Know Soon

Posted on 30 November 2015 by VRS  |  Email |Print

International Monetary Fund Managing Director Christine Lagarde and some two dozen officials on the fund’s executive board will gather Monday at headquarters in Washington for one of the most-anticipated decisions outside of actually approving loans for nations in crisis.
The question inside the 12th-floor, oval boardroom: whether to grant China’s yuan status as a reserve currency by adding it to the fund’s Special Drawing Rights basket. The SDR, created in 1969, gives IMF member countries who hold it the right to obtain any of the currencies in the basket — currently the dollar, euro, yen and pound — to meet balance-of-payments needs………………………………………..Full Article: Source

Gold close to lowest in nearly six years on stronger dollar

Posted on 27 November 2015 by VRS  |  Email |Print

Gold was trading near its lowest in nearly six years on Thursday, as the dollar held at multi-month highs after U.S. economic data reinforced expectations of an interest rate rise this year.
The U.S. currency was also supported against the euro, weighing on dollar-denominated gold, as European Central Bank officials told Reuters they were considering options such as whether to stagger charges on banks hoarding cash or to buy more debt. The ECB meets next week. Spot gold was up 0.2 at $1,072.86 an ounce by 1153 GMT, not far off $1,064.95 hit last week, the lowest since February 2010………………………………………..Full Article: Source

World ready for Chinese yuan’s inclusion into SDR

Posted on 27 November 2015 by VRS  |  Email |Print

On Nov. 30, the executive board of IMF will convene to decide whether the RMB should be included in its Special Drawing Right (SDR) basket, currently comprised of the euro, U.S. dollar,Japanese yen and British pound. Inclusion is now just a formality, according to J.P Morgan China Chief Economist Haibin Zhu, an opinion shared by many.
A number of members in the IMF have explicitly supported RMB inclusion. U.S. treasury secretary Jacob Lew will support the yuan’s bid if the currency meets IMF criteria. Britain has also backed inclusion and IMF managing director Christine Lagarde issued a statement recommending the move on Nov. 13. Four days later, she reiterated her support on the sidelines of the G20 summit in Turkey………………………………………..Full Article: Source

Important Level Breached In The Currency War

Posted on 27 November 2015 by VRS  |  Email |Print

Can you still remember what happened on 15th January this year? I’m talking about in the currency markets. At the time, it was a huge shock, certainly the biggest bombshell to hit the financial markets in 2015.
Fans of Tom Tragett will recall. He covered it in detail at the time in his excellent Forex Insider Daily newsletter. At the time, I remember him saying that 15.01.15 would be a date burned into the memory of forex traders, especially those who had a position in the Swiss franc – long or short. That may have jogged your memory………………………………………..Full Article: Source

Here’s Why You Shouldn’t Currency Hedge

Posted on 26 November 2015 by VRS  |  Email |Print

Currency-hedged ETFs are gathering assets hand over fist. With central banks engaged in a race to the bottom, hedging currency exposure is vital to protecting assets and capturing returns. This topic is so popular that it’s the title of a panel at the Inside ETFs conference coming in late January. Here’s why you shouldn’t take the bait …
It’s absolutely natural to want to hedge international stocks—especially now. U.S. stocks have trounced international stocks in large part due to the soaring U.S. dollar. Not only is money flowing into hedged international stock funds, even legendary passive investor Burton Malkiel has wandered off the random walk and is chair of a new hedged emerging markets stock fund………………………………………..Full Article: Source

Emerging Currencies Decline Amid Signs of Rising Political Risk

Posted on 26 November 2015 by VRS  |  Email |Print

Brazil’s real led emerging-market currencies lower amid political turbulence fueled by the arrest of one of Latin America’s top bankers in a corruption probe and a stand-off between Russia and Turkey over a downed fighter jet. Stocks fell for a third day.
The real tumbled 1.2 percent as a bribery scandal that has engulfed the state-run oil giant led to the arrest of Grupo BTG Pactual’s chief executive officer. The Ibovespa equity gauge slumped the most since Oct. 13. Russia’s ruble declined for the third time in four days and the lira dropped to a one-week low as Russia ratcheted up criticism of Turkey for shooting down its warplane on Tuesday. Chinese shares rallied amid speculation state intervention is working………………………………………..Full Article: Source

Currency trader? Chinese banks want you

Posted on 26 November 2015 by VRS  |  Email |Print

From London to New York, currency traders are clearing their desks as business evaporates. In Shanghai, new positions stay unfilled for weeks and prized experts are encouraged to put in overtime. Frank Zhang, head of foreign-exchange trading at China Merchants Bank Co in the nation’s financial capital, has been trying to hire three traders since October 16.
The local talent pool is too small, he says. His counterpart at Industrial Bank Co, Ye Yuzhang, is sweetening the deal with extra money for those who work late. “It’s not easy finding people with a strong foreign-exchange trading background here,” said Zhang, whose desk now comprises of 15 people………………………………………..Full Article: Source

In the Commodities Rubble, Citigroup Likes Look of Platinum

Posted on 25 November 2015 by VRS  |  Email |Print

In the beaten up world of commodities, platinum may prove to be a good bet. “Right now, platinum looks like an oversold metal,” Ivan Szpakowski, a commodities strategist at Citigroup Inc., told Rishaad Salamat in a Bloomberg TV interview on Tuesday when asked what’s hit rock bottom and may rebound.
The metal that’s used in jewelry and catalytic converters sank to the lowest level in seven years on Tuesday after retreating for the past five quarters. It’s lost 30 percent this year as the dollar advanced and the Volkswagen AG emissions scandal hurt prospects for demand………………………………………..Full Article: Source

China Takes a Smoother Path to Currency Devaluation

Posted on 25 November 2015 by VRS  |  Email |Print

Now that’s more like it. China’s currency is once again on a downward path, trading near its weakest point of the year at around 6.38 yuan per dollar. But unlike the plunge that scrambled world markets over the summer, Beijing is letting the air out just a little bit at a time.
The August move was hastily ordered and just as quickly pulled back with massive central bank interventions. The episode was uncharacteristically chaotic for investors accustomed to Beijing’s usually cautious policy-making………………………………………..Full Article: Source

Yuan stays flat as dollar-buying eases

Posted on 25 November 2015 by VRS  |  Email |Print

China’s yuan was almost unchanged on Tuesday, as dollar demand weakened after the US dollar index eased away from its 8-month peak on Monday. “Investors bought dollars gingerly after the dollar index softened,’’ said a trader at a Chinese commercial bank in Shanghai.
“Thus, dollar demand eased a lot and the yuan broadly stayed flat.’’ The dollar index, which tracks the US currency against six major rival currencies, edged down on Tuesday after hitting an 8-month peak of 100.00 on Monday………………………………………..Full Article: Source

Harmless commodity crash accelerates as dollar soars

Posted on 24 November 2015 by VRS  |  Email |Print

‘Dr Copper should be struck off the list. He is telling us a lot about over-supply in China, but little about the world economy,’ says Capital Economics. Copper prices have crashed to their lowest level since the Lehman Brothers crisis and industrial metals have slumped across the board as a flood of supply overwhelms the market.
The violent sell-off came as the US dollar surged to a 12-year high on expectations of an interest rate rise by the US Federal Reserve next month. The closely-watched dollar index rose to within a whisker of 100, and has itself become a key force pushing down commodities on the derivatives markets………………………………………..Full Article: Source

New York Opens Probe Into Currency Manipulation

Posted on 24 November 2015 by VRS  |  Email |Print

The New York Attorney General has opened an investigation into possible manipulation of options contracts tied to currencies of developing nations, according to a person familiar with the matter.
The regulator filed subpoenas last week to four brokers that operate platforms for trading the contracts: Tullett Prebon PLC, BGC Partners Inc., GFI Group Inc. and TFS-ICAP Ltd., the person said. The investigation was started after the attorney general’s office received a tip and is still at a preliminary stage, the person said………………………………………..Full Article: Source

Suriname devalues local currency

Posted on 24 November 2015 by VRS  |  Email |Print

Suriname has devalued its local currency by more than 20 per cent, four years after it devalued the currency in 2011 by 16.4 per cent and announced tax raises on alcohol, tobacco, gasoline and basic services.
The Central Bank of Suriname blamed the drop in global prices for oil and gold for the decision to devalue the currency which will now trade at four Suriname dollars to the US dollar, up from $3.25. The Central Bank said that the financial reserves had declined to US$370 million from one billion dollars in December 2012………………………………………..Full Article: Source

5 World Currencies That Are Closely Tied to Commodities

Posted on 23 November 2015 by VRS  |  Email |Print

For more than a year now, commodity prices have been under pressure from the strong U.S. dollar and slowing global demand. This has made a huge dent in the balance sheet of many net exporters of resources, in turn weakening their currencies.
This should come as a shock to no one, but what most people don’t realize is just how closely some currencies track certain commodities. When I presented at the International Mining and Resources Conference in Melbourne, Australia, earlier this month, I shared several charts that show this correlation. Many attendees were astounded—and we’re talking professional economists, money managers and CEOs here………………………………………..Full Article: Source

Speculators Still Love Shorting Currency Futures

Posted on 23 November 2015 by VRS  |  Email |Print

The continued build of short currency futures positions characterizes the changes in the speculative positioning. All the currency futures we track saw an increase in gross short positions. This is what drove the large net short positions. One thing this means is that late shorts are in weak hands, and as we have seen in the Australian dollar, vulnerable to a squeeze.
There were five significant (10k+ contracts) gross currency adjustments in the CFTC reporting week ending November 17. The gross short euro position jumped 21.1k contracts to 243.1k contracts. The record high set in March was near 271k contracts. The bears added another 11.1k short yen contracts to their gross short position, lifting it to 113.1k contracts………………………………………..Full Article: Source

Unfair to blame China for any currency war

Posted on 23 November 2015 by VRS  |  Email |Print

Reserve Bank of India (RBI) Governor Raghuram Rajan voiced support for the yuan’s International Monetary Fund (IMF) ambitions, combining a call for multilateral institutions to grant greater recognition to emerging markets, with a dismissal of claims that China sparked a currency war in August, according to the South China Morning Post.
It’s unfair to pin the blame on the August 11 yuan devaluation because currencies were already declining due to the “unconventional monetary policies” of some nations, Rajan was cited as saying in an interview with the newspaper. RBI is including yuan assets to diversify its holdings, he said………………………………………..Full Article: Source

Forex hedging still favoured despite currency fluctuation

Posted on 19 November 2015 by VRS  |  Email |Print

Although currencies this year have shown volatility and that trend is expected to continue in 2016, foreign exchange (FX) hedging by Thai traders has not changed, according to Krungsri Group. Half of the total Thai traders had FX hedging compared to 80 per cent of Japanese operators.
Tak Bunnag, head of Global Markets Group, said the cost of hedging is not high when compared to the risk of currency volatility. The hedging cost of Malaysia’s ringgit is 2.57 per cent but it can cover the currency depreciation of 20 per cent, while the hedging cost of the baht is 1.8 per cent, covering depreciation of 8.6 per cent. ……………………………………..Full Article: Source

India extends currency swap facility for SAARC members

Posted on 19 November 2015 by VRS  |  Email |Print

The government of India has extended the currency swap facility for SAARC members, under which the RBI offers the facility of varying sizes not exceeding USD 2 billion in total. The decision was taken by the Union Cabinet, chaired by Prime Minister Narendra Modi, today.
The Cabinet “has given approval for the proposal to provide a two year extension with amendments to the framework on ‘Currency Swap Arrangement’ for SAARC member countries up to November 14, 2017, and extension thereafter, if necessary, by Finance Minister,” an official statement said………………………………………Full Article: Source

Aussie dollar resists commodities rout - for now

Posted on 18 November 2015 by VRS  |  Email |Print

The Australian dollar has confounded traders by rising overnight despite a global commodities rout, but analysts say the gains are likely to be limited and predict the currency will face renewed pressure even when the prices of iron ore and other key commodities stabilise. The Aussie shrugged off a further 4.5 per cent drop in the price of iron ore, climbing overnight against the greenback to around US71.40¢ before easing to US71.15¢ in early local trade.
National Australia Bank global co-head of strategy Ray Attrill ascribed the unexpected resilience to a range of factors, including renewed faith the Reserve Bank of Australia will leave the cash rate at 2 per cent despite its concerns about the pace of China’s slowdown and sluggish household wage and spending growth at home………………………………………..Full Article: Source

Dollar pushes gold price to February 2010 low

Posted on 18 November 2015 by VRS  |  Email |Print

On Tuesday on the Comex market in New York, gold futures with December delivery dates were pushed to a five-year low by a strong dollar and waning safe haven buying following the Paris attacks. Exchanging hands for $1,064 an ounce in early afternoon trade, gold is now trading at levels last seen in February 2010. Seemingly destined for a third down year in a row for 2015, the metal is having its worst run since 1998.
At 99.83, the USD Index is back within striking distance of 12-year highs above the 100-level struck mid-March. While nowhere near its peak of the mid-80s, the greenback has made a strong run over the past couple of years appreciating more than 23% since the November 2013………………………………………..Full Article: Source

Hedge Funds Add to Bullish Dollar Wagers as Fed Decision Nears

Posted on 18 November 2015 by VRS  |  Email |Print

Currency traders are growing more bullish on the dollar as a consensus builds that the Federal Reserve is approaching liftoff. The greenback climbed to a seven-month high against the euro after data showed U.S. inflation and factory output increased in October, fueling speculation the U.S. central bank will raise interest rates from near zero as soon as next month.
The rally comes as hedge funds and other large speculators boosted wagers on dollar gains versus eight major currencies by a net 198,491 contracts over the past three weeks, the biggest jump since March 2013, according to data through Nov. 10 from the Commodity Futures Trading Commission………………………………………..Full Article: Source

The yuan as a global reserve currency? Don’t hold your breath

Posted on 18 November 2015 by VRS  |  Email |Print

The IMF is already clearing a berth in its basket of reserve currencies for the Chinese yuan. Once official, the yuan will be the first new currency to be added to the IMF’s special drawing rights (SDR) currency basket since the modern SDR system began in 1981. (The euro replaced the Deutsche mark and the French franc in 1999).
The Wall Street Journal hails the approval (paywall) as a “milestone in China’s efforts to establish the country as a global economic power.” That’s probably overstating things a tad. The re-weighting will boost demand for yuan-denominated assets by at most $40 billion, says Societe Generale………………………………………..Full Article: Source

Bearish Wagers on Chile Peso Jump With Currency Near 12-Year Low

Posted on 18 November 2015 by VRS  |  Email |Print

Bearish wagers on Chile’s peso climbed to a six-month high as the currency traded near the lowest level since 2003. Bets against the peso in the non-deliverable forwards market climbed to $9.2 billion on Friday, the most since March, according to data published by the central bank Tuesday.
The currency has tumbled 15 percent this year amid a plunge in copper, which makes up 49 percent of all Chile’s exports, and speculation that higher U.S. interest rates will dim the appeal of emerging-market currencies. “That’s a faithful reflection of fundamentals,” said Felipe Alarcon, the chief economist at EuroAmerica in Santiago. “This scenario is likely to continue until the Fed decision in December.”……………………………………….Full Article: Source

Will The IMF Grant China’s Currency Global Reserve Status?

Posted on 17 November 2015 by VRS  |  Email |Print

The market doubts it, but it is possible that the Chinese currency, the renmimbi (RMB), may become part of the International Monetary Fund’s special drawing rights, the multilateral institutions basket currency. That could be the match the lights the renmimbi rocket in the years ahead as a global reserve currency, likely replacing the Japanese yen and Great Britain pound in the currency hungry emerging market central banks.
The IMF Managing Director Christine Lagarde said they will make a decision about the RMB on Nov. 30. A few months ago, media reports suggested that people inside the IMF were saying that the Chinese currency was not yet ready for the big time………………………………………..Full Article: Source

Here’s Why China’s Currency Will Be Included in the IMF’s Basket

Posted on 17 November 2015 by VRS  |  Email |Print

The country spent the better part of a year reforming its currency to join the International Monetary Fund’s special group of world currencies. China finally got the news it has been lobbying for: its currency, the renminbi, is set to be included in the International Monetary Fund’s basket of top currencies alongside the world’s reserve currency, the U.S. dollar, as well as the Euro, British pound, and Japanese Yen.
It’s a win for China, which has lobbied for the past two years to be included in the club of countries whose currencies make up the ‘Special Drawing Right’. The SDR’s only practical purpose is that it’s the currency in which the IMF and other multilateral lenders draw up their accounts. But symbolically, it has always represented the balance of power in global financial markets………………………………………..Full Article: Source

Why a global currency should remain an impractical dream

Posted on 16 November 2015 by VRS  |  Email |Print

Today’s world is more economically and financially integrated than at any time since the latter half of the nineteenth century. But policymaking – particularly central banking – remains anachronistically national and parochial. Isn’t it time to re-think the global monetary (non) system?
In particular, wouldn’t a single global central bank and a world currency make more sense than our confusing, inefficient, and outdated assemblage of national monetary policies and currencies? Technology is now reaching the point where a common digital currency, enabled by near-universal mobile phone adoption, certainly makes this possible. And however farfetched a global currency may sound, recall that before the first world war, ditching the gold standard seemed equally implausible………………………………………..Full Article: Source

Currency transfer: The ultimate guide to moving money abroad

Posted on 16 November 2015 by VRS  |  Email |Print

Choosing the wrong option for currency exchange can be costly. We explain rules around protection and highlight how to avoid hidden fees and get the best deal. Demand for currency transfer services has exploded in the past few decades as Britons have an increasing number of reasons to exchange large sums of pounds into, mostly, dollars or euros.
This is because more people are buying and selling property abroad and need to move the deposit, or the proceeds. There’s also a need for regular sums to be transferred, which could be from a pension or savings moved to help pay bills or an overseas mortgage. Because of increasing migration, be it from the UK to Australia or Florida or Poland to Britain, there’s also increased demand for smaller payments be made to families………………………………………..Full Article: Source

What’s Next for the Yuan After Joining the IMF’s Currency Club?

Posted on 16 November 2015 by VRS  |  Email |Print

The yuan is set to join the IMF’s exclusive club of reserve currencies, with the fund’s staff supporting its inclusion after months of persuasion and policy changes by China. Approval by the International Monetary Fund’s executive board would mark a major milestone for the yuan, officially known as the renminbi, or literally the “people’s currency.”
It will make more countries comfortable including it in their foreign-exchange holdings, while boosting President Xi Jinping’s efforts to open up the world’s second-largest economy. Here’s a look at what’s next as the IMF board prepares to meet………………………………………..Full Article: Source

Currency hedging buoyed by strong dollar

Posted on 12 November 2015 by VRS  |  Email |Print

Foreign exchange is creating opportunity. The dollar is back pushing towards a new secular high, with its trade-weighted index passing 99 for the first time since April and threatening a new decade-long high. Meanwhile, short-term European interest rates have gone negative, and the European Central Bank appears minded to push them even lower.
That should provide the ingredients for a classic carry trade, along the lines of the “yen carry trade” that helped keep the Japanese yen cheap for years before the 2008 crisis. Borrow and sell a low-yielding currency (thereby helping to push it downwards), park in a higher-yielding currency, pocket the difference (or “carry”) and relax………………………………………..Full Article: Source

Chinese Currency Manipulation?

Posted on 12 November 2015 by VRS  |  Email |Print

It is an article of faith in some quarters that China manipulates its currency to gain an unfair advantage. China indeed does ‘manipulate’ its currency in the sense that it intervenes heavily in the foreign exchange markets. However, the objectives and effects are quite different from what those who accuse China of currency manipulation argue.
Donald Trump, the frontrunner for the Republican nomination, ventured into economics on the pages of the Wall Street Journal by accusing China of being a currency manipulator. More specifically, he argued that: Economists estimate that the yuan is undervalued anywhere from 15% to 40%. Through manipulation of the yuan, the Chinese government has been able to tip the trade balance in their direction by imposing a de facto tariff on all imported goods………………………………………..Full Article: Source

Egypt strengthens currency amid disruptive dollar shortage

Posted on 12 November 2015 by VRS  |  Email |Print

Egypt’s central bank strengthened the pound on Wednesday for the first time since 2013, injecting dollars into a banking system suffering from an acute foreign exchange shortage and raising expectations of a radical shift in monetary policy.
The central bank raised the pound’s official value by 0.20 pounds to 7.7301 to the dollar, surprising bankers who had been expecting a depreciation to ease a long-running currency crisis that has hit trade and industry and spooked investors. Heavily dependent on imports for food and energy, Egypt has seen a burgeoning black market for dollars………………………………………..Full Article: Source

Indian gold moves back to premium against dollar spot prices

Posted on 11 November 2015 by VRS  |  Email |Print

Gold bars imported into India moved back Tuesday to a premium against dollar spot prices for the first time since August as demand continued to rise before Diwali, sources said. “The rise in Indian premiums is a result of both higher demand coming in on the back of lower dollar prices, and a further reduction in custom duties for imported gold,” one Ahmedabad based refiner told Platts.
The variable import duty was cut to Rupee 2,413/10 grams ($112.99/oz) from Rupee 2,543.33/10 grams last week. “Everything has been all good since October 23 when the market started buying. From November 11, India will be closed for a good four days because of Diwali — but business will come back starting November 16,” said another refiner………………………………………..Full Article: Source

Currency war hits non-euro nations

Posted on 11 November 2015 by VRS  |  Email |Print

From Stockholm to Prague, Copenhagen and Zurich, officials in European nations circling the currency bloc are waiting for the European Central Bank (ECB) President Mario Draghi to say next month whether he would expand stimulus. Only then would it be clear whether they would need to retaliate with more asset purchases, rate cuts and currency interventions of their own to dig in against imported disinflation.
The ECB’s bonanza of cheap cash is depressing financial returns in the euro area and driving investment flows into neighboring nations, pushing up their currencies and defeating their efforts to hit their own inflation targets………………………………………..Full Article: Source

Cameron: EU mustn’t become ’single currency club’

Posted on 11 November 2015 by VRS  |  Email |Print

The European Union must not turn into a clique that discriminates against countries that don’t use the euro, UK prime minister David Cameron has warned. In a speech on Tuesday setting out his vision for Britain’s future role in Europe, Mr Cameron spelled out that the European Union and the eurozone “are not the same thing” and that needs to be accepted by countries that are within the euro-area.
It is a matter of “cardinal importance” that there is recognition that the EU is a union “with more than one currency”, Mr Cameron said, and those countries such as Britain that choose not to use the single currency do not bear any costs of supporting the euro. He warned that if the EU were to evolve into a “single currency club” where countries outside of the euro are pushed aside and over-ruled then “that would not be a club for us”………………………………………..Full Article: Source

Europe’s Quiet Currency War Besets Nations Losing Inflation Grip

Posted on 10 November 2015 by VRS  |  Email |Print

You don’t have to use the euro for Mario Draghi to be the central banker setting your monetary policy. From Stockholm, where the Riksbank will publish the minutes of its latest policy meeting on Tuesday, to Prague, Copenhagen and Zurich, officials in countries circling the currency bloc are waiting for the European Central Bank president to say next month whether he’ll expand stimulus.
Only then will it be clear whether they’ll need to retaliate with more asset purchases, rate cuts and currency interventions of their own to dig in against imported disinflation. Draghi’s bonanza of cheap cash is depressing financial returns in the euro area and driving investment flows into neighboring countries, pushing up their currencies and defeating their efforts to hit their own inflation targets……………………………………….Full Article: Source

Ending China’s Currency Manipulation

Posted on 10 November 2015 by VRS  |  Email |Print

If we are to make America great again, we must do all we can to make sure that American interests are protected and that all Americans benefit from the actions of their government. Sadly, that is currently not the case. The incompetent, rudderless Obama administration’s negligence in foreign policy, trade and national security is making America less confident, less prosperous and less safe. Americans deserve better, and a Trump administration will turn us into winners again.
In late September, President Obama signed an agreement with the Chinese head of state that was intended to add a layer of protection to intellectual property in both countries. The ink was not dry before Chinese-sponsored agents began cyberattacks on private companies in the U.S……………………………………….Full Article: Source

Dollar Bulls are Vulnerable as Currency’s Strength May Cap Rates

Posted on 09 November 2015 by VRS  |  Email |Print

Dollar bulls have reason to be wary of the currency’s Friday rally on stronger-than-forecast U.S. labor data. The jobs report bolstered the case for a December interest-rate increase by the Federal Reserve and propelled a broad gauge of the greenback past this year’s previous high. Yet the last time the dollar was this strong, the central bank flagged it as a burden on exporters and a damper of inflation, driving the currency down by the most since 2009.
The March experience is raising red flags for investors and strategists. A surging dollar may lead Fed officials to warn that currency moves will limit rate increases in 2016, even if they boost their benchmark next month from near zero, where it’s been since 2008………………………………………..Full Article: Source

Pacific trade zone nations make currency vow

Posted on 09 November 2015 by VRS  |  Email |Print

The US, Japan and 10 other countries joining a new Pacific Rim trade zone have pledged not to engage in currency wars with each other and to disclose any interventions in foreign exchange markets. The currency promise on Thursday came alongside the release of the full text of the Trans-Pacific Partnership, which President Barack Obama described as a break from past trade agreements that “haven’t always lived up to the hype”.
The pledge is aimed at addressing one of the biggest gripes of US critics of the TPP, including the Democratic presidential frontrunner Hillary Clinton, who say that countries such as China and Japan have in the past competed unfairly by intervening to keep the value of their currencies artificially low in order to benefit their exporters………………………………………..Full Article: Source

Pacific trade zone nations make currency vow

Posted on 06 November 2015 by VRS  |  Email |Print

The US, Japan and 10 other countries joining a new Pacific Rim trade zone have pledged not to engage in currency wars with each other and to disclose any interventions in foreign exchange markets.
The currency promise on Thursday came alongside the release of the full text of the Trans-Pacific Partnership, which President Barack Obama described as a break from past trade agreements that “haven’t always lived up to the hype”………………………………………..Full Article: Source

Kazakh currency slumps as volatile tenge allowed to reach a balance

Posted on 06 November 2015 by VRS  |  Email |Print

The currency of Central Asia’s leading economy, Kazakhstan, fell to a record low against the dollar during trading on Thursday as speculation grew that the newly appointed central bank chief, Daniyar Akishev, would shy away from the monetary authority’s previous attempts to slow the volatile tenge’s slide.
The Kazakh currency tumbled to a nadir of nearly 304 to the dollar before rising to 298.9 at the end of the morning session, a drop of some 4 percent………………………………………..Full Article: Source

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