The simmering currency war among the world’s major economic powers is set to heat up significantly over the coming year following the decision by the US Federal Reserve earlier this month to step up its so-called “quantitative easing” program.
Under the new initiative the Fed will expand its holdings of financial assets from their present level of $2.9 trillion to some $4 trillion by the end of 2014 through continuing purchases of mortgage-backed securities and Treasury bonds………………………………………..Full Article: Source

The lack of participation in the FX market today has meant an increase in volatility for many of the major currencies. The EUR/USD for example soared at the start of the U.S. session as equities opened higher only to give up those gains when stocks turned negative.
U.S. markets were open for trading, but with Europe closed for Boxing Day and most U.S. investors out for the entire week, there was very little reason for the excitement during the North American hours………………………………………..Full Article: Source

Emerging-market currencies could go from this year’s laggards to next year’s outperformers, investors and analysts say. Most currencies from the developing world rose slightly against the dollar in 2012, but couldn’t compete with returns from emerging-market dollar-denominated debt.
The MSCI EM Currency (USD) index is up about 5% year-to-date, while emerging-market sovereign dollar-denominated debt has soared to see total returns of 18%, according to a Barclays index………………………………………..Full Article: Source

It’s forecast season again, and the currency strategists are hunched over their crystal balls and chart, busily producing their best calls for 2013.
At Wells Fargo, one group of currencies in favor for the new year is what they call the ‘nifty NAFTA.’ The strategists, led by Nick Bennenbroek, say the Canadian dollar and Mexican peso are poised to outperform other risk-sensitive currencies like the Australian and New Zealand dollars………………………………………..Full Article: Source

Japan’s newly elected president, Shinzo Abe, has signaled his intention to do whatever he can to devalue the Japanese yen in order to provide a boost to the nation’s ailing economy. This virtually assures a lower yen and this article looks at how traders and investors can profit from it.
Last weekend Japan’s Liberal Democratic Party (LDP) led by Shinzo Abe won a clear majority in the country’s general election. Shinzo Abe has said that his top priority is the Japanese economy which has been combating deflation for over two decades………………………………………..Full Article: Source

Europe’s currency is toughening up, in part because fiscal crises in the US and Japan suddenly seem much more dire. But how long will it last? The euro had been in decline against the dollar and the yen since the end of February through July 24. After a rally through Oct. 17, it dropped again until Nov. 13. During those specific declines and during that seven-month period in general, money flowed into dollars and yen and into assets denominated in those currencies.
A rising dollar weighed on the price of commodities such as gold and oil. Japanese exporters found themselves at a painful disadvantage in selling their goods — such as cars — to European customers who weren’t inclined to buy anyway as their economies slipped into recession…………………………………….Full Article: Source

As some analysts feared, Wednesday’s launch of a new wave of Federal Reserve money printing (more politely known as “QE4″, or the central bank’s fourth round of “quantitative easing”) failed to spur a rally in precious metals markets as prices for both gold and silver ended the week below where they began.
Since, in the past, new stimulus measures by the Fed have been a major factor in pushing metal prices higher, this has prompted some concern amongst investors……………………………………..Full Article: Source

There’s always a difference in the markets between “de facto” (”in practice”) and “de jure” (”in law”), and recent announcements regarding international reserve currencies would seem to reflect that difference. Word came out in mid-November that the IMF is likely to reclassify the Australian dollar and Canadian dollar as “official” reserve currencies. While this is indeed a significant development, it seems more a reflection of reality than a major prospective change.
Foreign exchange reserves are held by most governments as a means of facilitating trade and better managing (and maintaining) credit……………………………………..Full Article: Source

One of the most important and oft-discussed topics in asset management is benchmarking. Even though the daily turnover in global currency markets has reached over $4.7 trillion, (according to Bank for International Settlements) investors need to be aware of some key issues when it comes to benchmarking currency portfolios.
Growth in Global Currency Markets: In terms of daily turnover, global currency markets are almost 20 times the size of global equity markets and about 36 times the size of global bond markets. From 2007 to 2010, just the daily spot transactions had a 48% increase, from $1 trillion to $1.49 trillion……………………………………..Full Article: Source

With the euro zone debt crisis is far from over, a new strategy has been put forward to alleviate the strain currently faced by households and consumers across the continent. Consultancy firm Strategic Decisions Groupis urging Europe’s leaders to adopt a dual currency approach as an alternative to the greater fiscal integration that is currently being discussed at EU summits.
Managing director of its Europe and Middle East arm, Mazen Skaf, says that struggling countries should be given the flexibility to introduce national currencies alongside the euro………………………………………..Full Article: Source

There’s always a difference in the markets between “de facto” (”in practice”) and “de jure” (”in law”), and recent announcements regarding international reserve currencies would seem to reflect that difference.
Word came out in mid-November that the IMF is likely to reclassify the Australian dollar and Canadian dollar as “official” reserve currencies. While this is indeed a significant development, it seems more a reflection of reality than a major prospective change………………………………………..Full Article: Source

Hopes of the US Federal Reserve Bank announcing more stimulus measures to boost economy could drive gold higher on Tuesday. However, the dollar’s weakness against a basket of major currencies could cap gains.
Economists say that the US Fed will announce purchase of bonds worth $ 45 billion after its meeting on Tuesday and Wednesday. This would mean pumping money in the US economy to improve employment prospects………………………………………..Full Article: Source

The Polish zloty led a resurgence against the euro Tuesday. The currency, along with other emerging European currencies, got a boost after a key economic indicator in Germany surged in December raising expectations of growth in that economy.
Germany is the main market for Polish and Czech exports, and these economies had slowed in the third quarter due to weaker demand for goods. Investors had begun to worry that the downturn would extend well into 2013, and this had weakened the Polish zloty and Czech koruna…………………………………………Full Article: Source

The Aussie dollar has rallied to its highest level in almost three months after a rebound in German investor confidence lifted global markets. At 7am this morning, the currency was trading at US105.22 cents, up from US104.82c.
It reached a high of US105.33c overnight, its highest level since September 17, after a closely watched indicator of economic sentiment in Germany rose to 6.9 points, from minus 15.7 in November………………………………………..Full Article: Source

The head of the Bank of England warned on Monday that too many countries were trying to weaken their currencies to offset the impact of the slow global economy and the trend could grow next year.
“You can see, month by month, the addition to the number of countries who feel that active exchange rate management, always to push their exchange rate down, is growing,” Mervyn King said in a speech………………………………………..Full Article: Source

Brazil’s real gained on Monday after a central bank director said the currency still has room to appreciate, adding to expectations that the government may further intervene in the foreign exchange market.
Other Latin American currencies also strengthened as a positive Wall Street session fueled investors’ appetite for risk, while Venezuela’s bonds rallied after ailing President Hugo Chavez named a successor, raising the prospect of his departure after 14 years in power………………………………………..Full Article: Source

Oh China, how could we ever have doubted you? Look at those data go. Official figures released Sunday showed that industrial production was up by a very perky 10.1% last month, compared with the position a year earlier. And there was more: retail sales soared 14.9%, putting in their best showing for eight months.
These are the first numbers to see daylight since the Communist Party’s epochal leadership transition last month, and the new boys must be delighted with them. There have been seven straight quarters of slowing growth running up to September, but this sort strength will argue strongly against 2012 bowing out with an eighth………………………………………..Full Article: Source

Sterling continued to lose ground against the US dollar on Friday dropping to 1.60; but, traded in a relatively narrow range against the majority of currencies. Rumours continue to build that the UK will soon lose its gold plated AAA rating; however, a lot of economists are suggesting this is already priced into the market and won’t really affect the UK’s economy due to only 7 countries currently having a “stable outlook”.
On the data front, the change in manufacturing production fell sharply by 1.3% when only a 0.2% drop had been anticipated. The Governor of the Bank of England is speaking this week and we will also have the benchmark 10-year bond auction………………………………………..Full Article: Source

The best way to take advantage of this imminent further devaluation of the dollar is to move as much of your investable funds into physical gold and silver as you can. Also, you can create rate of return leverage with this by investing in mining stocks (which are egregiously cheap right now).
To implement this strategy, you would be piggy-backing an investor class with the best look at “inside” information regarding the issues of money printing and economic health: the world’s Central Banks. As chronicled by this report, Central Banks globally have purchased a record amount of over 500 tonnes of gold during 2012………………………………………..Full Article: Source

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The Australian dollar is slightly higher as a sell-off in the euro currency weighs against positive sentiment from US employment figures released late last week. Around midday, the currency was trading at 104.82 US cents, up from 104.78 US cents on Friday afternoon.
Easy Forex currency dealer Tony Darvall said the sell-off in the euro was weighing against the Australian dollar. The euro has fallen against major currencies after Italian Prime Minister Mario Monti announced his intention to resign………………………………………..Full Article: Source

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Emerging market currencies were mixed on a day that saw these currencies break free of their previous trading patterns. In the backdrop of a weaker euro, and a weaker outlook for the euro zone after a European Central Bank meeting, emerging market currencies typically would have also sold off.
On Thursday, the underperformance was limited to emerging European currencies, while other regions fared modestly well………………………………………..Full Article: Source

The Hong Kong Monetary Authority was forced to step into the currency markets again on Wednesday as the Hong Kong dollar hit the limit of its trading band against its US counterpart.
The city’s de facto central bank has now intervened to the tune of US$2.6bn in the past week to weaken its currency, as money from around the world continues to pour in to Asia………………………………………..Full Article: Source

Gold may gain in the domestic bullion market on Thursday as the dollar gained against the basket of currencies. But a report by Goldman Sachs pointing to downturn in the yellow metal is likely to cap most of the gains.
Overnight, Goldman Sachs said that bullion prices could head lower next year as real interest rate could rise on the heels of improved growth. The real interest rate could increase in view of improved growth, it said, projecting a bearish outlook for three, six and 12 months outlook………………………………………..Full Article: Source

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Most emerging-market currencies edged higher Wednesday as investors took on a more optimistic tone on the back of hopes for more economic stimulus policies in China.
Market participants ramped up expectations for Chinese economic stimulus in response to comments by China’s new generation of leaders, led by party chief Xi Jinping, that urbanization and the construction of public housing in the country would be stepped up. Emerging market investors look to growth in the world’s second-largest economy as a key economic engine for much of the developing world………………………………………..Full Article: Source

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Trade giants China and South Korea have agreed to utilise their currency swap valued at $59 billion to boost the use of yuan and won in bilateral trade, Seoul’s finance ministry and central bank said on Tuesday.
Central banks of the world’s largest and seventh largest exporters will begin lending trading firms yuan and won through banks from later this month for use in settling trade bills, the Ministry of Strategy and Finance and the Bank of Korea said in a joint statement………………………………………..Full Article: Source

Unfavorable foreign-exchange rates are marring the results of more big U.S. companies, as their expanding operations abroad expose them to the swings of a growing number of currencies beyond the euro and British pound.
But don’t expect those companies to hedge their currency risk more than they already do. That’s because hedging is costly and can damage results more if a company makes the wrong bet………………………………………..Full Article: Source

How’s this for a statistic: currency fluctuations resulted in $22.7 billion in aggregate losses during the third quarter for some of the biggest U.S.-based multinationals.
That’s the word from FiREapps, a provider of software that helps corporations manage their foreign currency exposure. Wolfgang Koester, the firm’s founder and chief executive says that while more and more corporate leaders are becoming cognizant of currency impacts, they remain myopic when it comes to considering just which currencies they need to worry about………………………………………..Full Article: Source

China could eclipse the United States sooner than many think as the yuan (renminbi) becomes a major player on the word stage that could put the dollar in the shade, analysts said. China’s meteoric rise has propelled it into second place among the world’s biggest economies, leaving only the United States in its wake.
Consumption as a share of gross domestic product is still relatively low in China (35 percent compared to around 70 percent in the U.S. according to the World Bank). But a booming middle class could see the country move away from its export driven economy to a more import and domestically focused market. A market that would need a dominant yuan to allow it to have a trade deficit but remain competitive………………………………………..Full Article: Source

Is the “fiscal cliff” real or just another hoax? The answer is that the fiscal cliff is real, but it is a result, not a cause. The hoax is the way the fiscal cliff is being used. The fiscal cliff is the result of the inability to close the federal budget deficit.
The budget deficit cannot be closed because large numbers of US middle class jobs and the GDP and tax base associated with them have been moved offshore, thus reducing federal revenues. ……………………………………….Full Article: Source

Asia’s biggest laggard could turn into one of the best performers next year. We are talking about the Indian rupee which has tanked 13 percent since its peak in February, but one expert predicts this beleaguered currency is in for a big turnaround in the new year.
Weighed down by anemic growth and lack of investor interest as the government struggled to implement economic reforms, the Indian rupee has had a tumultuous year. For example, it fell more than 17 percent over February-June, raising the cost of imports and fueling inflation………………………………………..Full Article: Source

Republican presidential candidate Mitt Romney vowed he’d do this as president. Senator Chuck Schumer (D-NY) has been a public advocate of it. But the White House says it would not label the nation’s largest trading partner — China — a currency manipulator.
In its semi-annual report to Congress on international economic and exchange rate policies, the Treasury Department says China has taken steps to appreciate its currency, the renminbi, and “Chinese authorities have substantially reduced the level of official intervention in exchange markets since the third quarter of 2011.”……………………………………….Full Article: Source

China isn’t a currency manipulator under U.S. law, though the yuan “remains significantly undervalued” and needs to rise further, the Treasury Department said. China “has substantially reduced the level of official intervention in exchange markets since the third quarter of 2011,” the Treasury said in a statement accompanying its semi- annual currency report to Congress.
The yuan has gained 9.3 percent in nominal terms and 12.6 percent in real terms against the dollar since June 2010, the Treasury said………………………………………..Full Article: Source

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The Brazilian real dropped to a three-year low last week as President Rousseff and other officials stepped up their public campaign to keep the currency weak . President Rousseff pronounced the currency as, “overvalued,” just a weeks after Central Bank President Tombini promised low rates for a, “prolonged time.”
Fears of further intervention sent the real down almost a percent to BRL 2.0985 against the dollar. The local currency now buys less than two-thirds what it did last year when it reached a multi-year high of BRL 1.54 per dollar………………………………………..Full Article: Source

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Since September, the Currency Wars have escalated. It isn’t just because of the seminal monetary events of the Federal Reserve’s QE III “unlimited” and the ECB’s OMT “Uncapped”. It is highly likely, more about the fact that China announced its eleventh agreement that effectively bypasses using the US dollar with China’s strategic trading partners.
The latest agreement with Russia places trading oil, in non-US dollars, into the spotlight. The infamous petrodollar has had its destructive profile raised………………………………………..Full Article: Source

China blamed quantitative easing for damaging emerging economies and rejected Brazil’s proposal of using world trade rules to compensate for currency misalignments, during a debate at the WTO on Monday.
“We, together with many other countries, have been critics of this irresponsible and beggar-thy-neighbour policy,” China’s deputy permanent representative to the World Trade Organization, Zhu Hong, said, referring to the monetary stimulus policy often shortened to QE………………………………………..Full Article: Source

Currency markets retrenched as last week’s best performers suffered and haven currencies benefited from stronger demand.
The Swedish krona, the Norwegian krone and the euro were among the G10 winners last week versus the US dollar, each gaining more than 1.2 per cent against the dollar since November 19………………………………………..Full Article: Source

Will the U.S. dollar maintain its status as the world’s reserve currency? Will the euro or the IMF’s SDR become viable alternatives? How will China’s policies affect global currency balances? Will gold continue to reassert itself as more of a currency than a commodity?
The nine authors whose original essays are collected in Currencies after the Crash: The Uncertain Future of the Global Paper-Based Currency System, edited with commentary by Sara Eisen of Bloomberg TV (McGraw-Hill, 2013), tackle these and many other topics that every investor should understand………………………………………..Full Article: Source

Could the Australian dollar explode to $1.20 against the US dollar next year? The possibility of the local currency surging higher from the current elevated level is a scenario that is rarely contemplated by most financial analysts and traders. The consensus view is we have to get used to the Aussie trading close to parity or marginally higher for the time being because of the policies being adopted by the major central banks around the world.
However, this is a completely different story to the Aussie moving significantly higher. An appreciation of the local dollar would put the domestic economy and the Reserve Bank of Australia under enormous pressure………………………………………..Full Article: Source

South Korea’s won weakened for a third day as concerns that the government will act to stem currency gains offset optimism the Chinese economy is set for recovery. Government bonds were steady.
South Korea’s Deputy Finance Minister Choi Jong Ku said yesterday there is “herd behavior” in currency market and that the government will take action to curb excessive fluctuations. The won is the best-performer among 11 most-traded Asian currencies since end of June. A preliminary reading released yesterday signaled China’s manufacturing may expand in November for the first time in 13 months………………………………………..Full Article: Source

Emerging market currencies broadly slumped Wednesday, dragged down by the euro-zone debt crisis, U.S. fiscal cliff concerns and Middle East tensions. The South African rand and Brazilian real dived sharply, while other emerging market currencies suffered as investors booked profits on recent gains.
These currencies have largely been held hostage by concerns over the looming U.S. year-end deadline to prevent a combination of spending cuts and tax rises. Meanwhile, the failure of euro-zone officials to reach an agreement Tuesday to disburse the next slice of bailout aid for Greece unnerved investors. Spain, meanwhile, remains another key source of jitters………………………………………..Full Article: Source

International investors reduced their bets against the peso by $1.1 billion in two days to the lowest level in a month on Nov. 19, according to data published today by the central bank.
The peso was little changed at 477.95 per dollar at the close of trading in Santiago. International investors in the Chilean peso forwards market reduced their short position to $8 billion Nov. 19 from $9.1 billion Nov. 15. Chile’s two-year swap rate was 5.08 percent today, compared with 5 percent at the end of last week………………………………………..Full Article: Source

Emerging market currencies were mostly stronger, with investors turning optimistic that the U.S. fiscal cliff will be avoided.
Still, until the budget problems threatening the fiscal cliff are resolved and there’s also a debt solution in Europe, emerging market currencies are expected to trade choppily. “Emerging markets are not that attractive in general ahead of the fiscal cliff,” said Jose Wynne, head of North America foreign-exchange research at Barclays……………………………………..Full Article: Source

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Welcome to the big leagues. The International Monetary Fund is adding the Canadian dollar to the elite band of currencies it formally tracks as reserve assets, a nod to the loonie’s established appeal among central banks seeking to diversify their reserves.
Inclusion in the IMF’s Composition of Foreign Exchange Reserves, or COFER, largely amounts to a technical change for the loonie and the Australian dollar, which is also being added………………………………………..Full Article: Source

European policy makers are working hard to preserve the Continent’s monetary union in its present form. But if these efforts come to nothing, a euro breakup is hardly the most likely outcome. A mutation of the existing monetary arrangement, involving the emergence of parallel currencies to the euro, seems to me likelier than its wholesale disappearance.
When the euro was created, most economists believed the euro zone did not satisfy the conditions for a viable currency area, to say nothing of an “optimum” one. Yet the European monetary union worked quite well for almost a decade………………………………………..Full Article: Source

The Ugandan and Tanzanian shillings are expected to come under pressure next week because of a surge in dollar demand from domestic importers, while the Ghanaian cedi is expected to benefit from a $650 million syndicated loan. Uganda’s shilling is forecast to struggle against the dollar in the coming week as a spike in demand from fuel firms and other importers adds further pressure on already tight dollar supplies.
On Thursday, commercial banks quoted the shilling at 2,605/2,615, weaker than last Thursday’s close of 2,587/2,597. Pressure has been mounting on Uganda’s currency this week, mainly driven by importers looking to stock goods for Christmas holiday shoppers. The shilling has shed nearly 5 percent of its value in the year to date……………………………………….Full Article: Source

Amid re-ignited concerns over the macro-economic scenario in India and abroad, the rupee has again slipped below the 55-level against dollar, the largest fall among its major peers globally in the past 30 days.
As against the US dollar, the rupee has sharply fallen from 52.88 levels one month ago to 55.16 on Friday, marking a drop of over 4.2 per cent. This is the largest fall vis-a-vis the US dollar in the past one month among 25 major currencies across Asia, Americas, Europe, the West Asia and Africa……………………………………….Full Article: Source

A standard ploy of magicians and politicians is called misdirection. The audience is distracted from the real movement by a feint. “Currency war,” which has become the title of books, articles and conferences, is such a misdirection.
Some officials, notably Brazilian Finance Minister Guido Mantega, have been leading the charge that through pursuing unorthodox monetary policy, the U.S. has sparked powerful forces that destabilize the emerging market economies through capital flows, driving the currencies sharply higher. ……………………………………….Full Article: Source

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Emerging market currencies were mixed Wednesday as global concerns continued to weigh on investors. Poor economic data from Greece and Portugal, which were actually worse than expected, prompted the initial weakening. But emerging market currencies gained a bit on the orderly transition of leadership in China and gained confidence that the new team would focus on stabilizing the country’s rebounding economy.
Also, comments by Federal Reserve Vice Chairwoman Janet Yellen suggesting rates would be held low for a long time and the Federal Reserve’s recent meeting minutes weakened the dollar………………………………………..Full Article: Source

A standard ploy of magicians and politicians is called misdirection. The audience is distracted from the real movement by a feint. “Currency war,” which has become the title of books, articles and conferences, is such a misdirection.
Some officials, notably Brazilian Finance Minister Guido Mantega, have been leading the charge that through pursuing unorthodox monetary policy, the U.S. has sparked powerful forces that destabilize the emerging market economies through capital flows, driving the currencies sharply higher………………………………………..Full Article: Source

The BRICS countries are due to establish a joint currency fund. A formal decision has been made because this reserve is necessary in case of another economic crisis.
Now Brazil, Russia, India, China and South Africa are discussing concrete parameters and conditions of accumulating currency reserves. The size of the fund has also been determined. It is to be $240bln. However, the establishment of the mechanism of mutual lending has an important political aspect as well, say experts……………………………………….Full Article: Source