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Commodities Briefing - Category | Currencies more

Here’s one argument why China will lose its currency war

Posted on 29 January 2016 by VRS  |  Email |Print

A currency war is not all it’s cracked up to be. That is the verdict from Citi’s currency expert Steven Englander, who argues that efforts by central banks to devalue their currencies to maintain an edge over competing economies are not as effective as many are led to believe.
“Policy makers and investors talk about currency depreciation as if it is the ultimate weapon of economic policy, but that overstates its importance in driving activity,” said Englander in a report. “The economic bang for the depreciating buck, or yen or euro is relatively small.”……………………………………….Full Article: Source

Currency War in Asia

Posted on 28 January 2016 by VRS  |  Email |Print

Billionaire investor George Soros will not win the ‘war’ he is waging against the Chinese currency, according to the People’s Daily, Beijing’s state-run newspaper. George Soros declared a war on the Chinese currency at the World Economic Forum at Davos, and his influence has already affected fluctuations at global financial markets and subjected the Asian currencies to even greater speculative pressure.
However, the challenge Soros has levied against the renminbi and Hong Kong dollar is “doomed to fail, without any doubt,” the newspaper has declared. In fact, Soros’ attacks against the Asian currencies may in fact help China deepen fiscal and financial cooperation with other countries in the region………………………………………..Full Article: Source

Commodity-Exporter Currencies Hold Gains With Crude Oil’s Bounce

Posted on 27 January 2016 by VRS  |  Email |Print

The currencies of commodity-exporting nations held gains after raw-material prices rebounded, providing a respite from this month’s selloff. The Canadian dollar and South African rand rose about 1 percent on Tuesday as prices for crude oil, metals and agricultural commodities gained.
The currencies had advanced amid a broader climb for natural-resource exporters against the U.S. dollar in the previous five days. “The key driver for commodity currencies today is that oil is up 3 to 4 percent,” Ian Gordon, a foreign-exchange strategist at Bank of America Corp. in New York, said ……………………………………….Full Article: Source

China warns Soros against ‘declaring war’ on its currency

Posted on 27 January 2016 by VRS  |  Email |Print

Not long after billionaire George Soros forecast a so-called hard landing for the Chinese economy, Beijing fired back by calling out the high-profile investor, warning him of betting against its currency, according to media reports Tuesday.
“Soros’ challenge against the renminbi and Hong Kong dollar is unlikely to succeed, there is no doubt about that,” said a government official in an opinion piece widely cited by several media outlets………………………………………..Full Article: Source

Commodity Exporters’ Currencies Weaken Against Dollar on Oil Glut Worries

Posted on 26 January 2016 by VRS  |  Email |Print

The currencies of commodity-exporting countries resumed their slide against the dollar Monday as oil prices halted a recent sharp rally and plunged again on renewed concerns about oversupply.
Currencies including the Colombian peso, the Russian ruble and the Canadian dollar all depreciated against the dollar after China reported on Monday that its diesel usage in 2015 fell from the prior year. On the same day, the chairman of the Saudi Arabian Oil Co. said that the state-run oil company can withstand low oil prices for “a long, long time,” reiterating the kingdom’s commitment to oil production………………………………………..Full Article: Source

Aussie to Kiwi in Commodity Comeback Upend Year’s Favored Trades

Posted on 26 January 2016 by VRS  |  Email |Print

Commodity currencies are making a comeback as increasing speculation central banks will step up stimulus revived demand for risk, upending this year’s favorite trades. The dollars of Australia and New Zealand climbed Monday, adding to gains from last week when they rose along with the currencies of Canada and Norway in anticipation of further stimulus from the European Central Bank.
Hedge funds added to bearish bets on commodity currencies in the week through Jan. 19, while building the most bullish yen position in almost four years. ECB President Mario Draghi is scheduled to speak Monday in a week when the Federal Reserve and Bank of Japan meet, with markets also speculating on monetary easing in China………………………………………..Full Article: Source

Nigeria’s currency in free fall due to oil slump

Posted on 26 January 2016 by VRS  |  Email |Print

Food wholesaler Chioma Oluwaseun was sorting through the inventory in her warehouse to hike prices for imports, in line with a Nigerian currency that has lost a third of its value on unofficial “parallel markets” since last month.
Even though the naira is plunging on the street, a result of the collapse of global prices for oil exports, which Nigeria depends on for state revenue, the official exchange rate has yet to budge. But few think that situation can last much longer………………………………………..Full Article: Source

IMF’s Lagarde says markets need clarity on China currency

Posted on 25 January 2016 by VRS  |  Email |Print

Financial markets need more clarity on how Chinese authorities are managing their currency, particularly the relationship of the yuan to the U.S. dollar, IMF Managing Director Christine Lagarde said on Saturday.
Sharp swings in the yuan have contributed, along with a dramatic fall in the price of oil, to global market volatility since the beginning of 2016. Bank of Japan Governor Haruhiko Kuroda, speaking on the same panel at the World Economic Forum in Davos, said he believed China should use capital controls to stabilize its currency while keeping domestic monetary policy loose………………………………………..Full Article: Source

China to set up its own virtual currency

Posted on 25 January 2016 by VRS  |  Email |Print

The People’s Bank of China (PBOC), China’s central bank, hopes to launch its own virtual currency to cut the cost of handling paper money and to give the government more control of the country’s money supply.
A research team has been looking into digital currencies since 2014 and has achieved some encouraging initial results. This team should now “set up clearer strategic objectives for launching digital currencies, overcome the technological barriers … and aim for an launch of the central bank’s digital currencies,” the PBOC said………………………………………..Full Article: Source

Chinese currency chaos

Posted on 22 January 2016 by VRS  |  Email |Print

A sharp drop in the value of the yuan appears imminent, even though its international prestige has been heightened with a decision by the International Monetary Fund to include the Chinese currency in the basket of currencies constituting the special drawing rights.
A dreadful slump affecting China’s export-oriented industries has accelerated selling of the yuan on the exchange market while doubts have been cast on Beijing’s ability to shore up the currency. A rapid fall in the yuan’s value could further exacerbate the Chinese people’s purchasing power and deal a serious blow to a global economy already being shaken by slowdowns in many emerging economies………………………………………..Full Article: Source

Rouble hits new low, Kremlin denies currency collapse

Posted on 22 January 2016 by VRS  |  Email |Print

The rouble maintained its slide through record lows on Thursday, threatening more hardship for ordinary Russians and prompting some to stock up on dollars as the Kremlin denied the currency was collapsing.
Central bank governor Elvira Nabiullina cancelled a visit to the World Economic Forum meeting in the Swiss resort of Davos as the currency, squeezed by Western sanctions and the collapse in the value of Russia’s oil exports, chalked up one of its biggest intraday drops in around a year. At one point the rouble smashed through 83 per dollar for the first time and weakened as far as 86, though it later recovered some ground………………………………………..Full Article: Source

Russian Currency Slumps To Record Low

Posted on 21 January 2016 by VRS  |  Email |Print

Russia’s currency has slumped to a record low, trading at 82 rubles per U.S. dollar and 89.55 per euro. The ruble’s previous all-time low was 80.10 per dollar in December 2014.
The declining value of the ruble comes as global oil prices continued to fall, trading on January 20 at around some $27.45 per barrel and even briefly going under $27 per barrel. The ruble also is under pressure from economic sanctions that the West has imposed against Russia in response to its support for pro-Russian separatists in eastern Ukraine………………………………………..Full Article: Source

Saudi Arabia moves to protect currency peg

Posted on 21 January 2016 by VRS  |  Email |Print

Saudi Arabia is trying to stop speculators from betting against its currency. Authorities this week ordered banks to limit traders’ ability to bet against the riyal in the futures market in an effort to protect its nearly 30-year old peg to the dollar, according to Bloomberg News.
The peg has come under pressure lately as speculators have been piling into bets against the currency as falling oil prices have helped deplete the desert kingdom’s foreign currency reserves………………………………………..Full Article: Source

Bitcoin: Is the crypto-currency doomed?

Posted on 19 January 2016 by VRS  |  Email |Print

A high-profile Bitcoin developer has said the crypto-currency has failed and he will no longer take part in its development. Mike Hearn, a Zurich-based developer and long-time proponent of Bitcoin, surprised many this weekend when he published a blog calling Bitcoin a “failed” project.
Mr Hearn, who had until recently been working on new software for the currency, says he has now sold all of his own bitcoins and will no longer take part in the crypto-currency’s development. So, is Bitcoin doomed?……………………………………….Full Article: Source

Azerbaijan considers tighter currency controls to staunch losses

Posted on 19 January 2016 by VRS  |  Email |Print

Azerbaijan’s President Ilham Aliyev has ordered measures to support the economy and ailing manat currency, including a possible tightening of currency controls, help for banks, and a sell-off of state assets, state television reported on Monday.
The manat has lost 33 percent of its value against the dollar in the past month and the country has burned through more than half its foreign currency reserves trying to defend it against the effect of falling oil prices………………………………………..Full Article: Source

Expect boost for global currency war, resurgent yen and euro may force policy makers to step in

Posted on 18 January 2016 by VRS  |  Email |Print

A flare-up in the global currency war is looming, as a resurgent yen and euro threaten to give policy makers in Japan and Europe an incentive to add monetary stimulus. Japan’s currency advanced versus the dollar for the third time in four weeks, while the euro climbed versus most of its peers.
Hedge funds lifted bets on yen strength to the highest in more than three years, and pared wagers against the European common currency. The greenback suffered as sentiment cooled for further currency-supportive interest-rate increases in the US amid sustained market volatility and weakerthan-forecast domestic economic data………………………………………..Full Article: Source

Currency Dictatorship. The Struggle to End US Dollar Hegemony

Posted on 18 January 2016 by VRS  |  Email |Print

India and the BRICS are giving the US dollar the boot? Is it really so? The last time a country decided to dump the dollar in the oil business, the US destroyed it. Now India, the world’s third largest economy, and Iran have agreed to settle their outstanding oil dues in rupees. What’s more, the two countries may conduct all future trade in their national currencies.
This follows an agreement between Iran and India in mid-2011 in which both sides decided to settle 45 per cent of India’s oil import bill in rupees and the remaining 55 per cent in euros. In March 2012 the two countries inked the Rupee Payment Mechanism that allowed India to buy crude oil in its national currency. Iran then used the funds to buy products from Indian manufacturers………………………………………..Full Article: Source

Is China a Currency Manipulator?

Posted on 15 January 2016 by VRS  |  Email |Print

We are well into a political season as the U.S. presidential campaign heats up. We are also in the midst of deflationary pressures evident in the unprecedentedly low cost of oil and other commodities, and the falling dollar value of the yuan.
Many Republican candidates, led by Donald Trump, are keen to blame America’s economic troubles on President Obama and, of course, on the Chinese. “Currency manipulator” is the typical charge against China. But what does it mean and why is being thrown around now?……………………………………….Full Article: Source

China Wants a Reserve Currency and Control, But Can’t Have Both

Posted on 15 January 2016 by VRS  |  Email |Print

This week’s unprecedented surge in the cost of borrowing yuan in Hong Kong is putting a spotlight on one of China’s biggest policy dilemmas: whether to create a real international reserve currency, or to keep control of its value.
The cost of maintaining control came to the fore on Tuesday as interbank lending rates in the city jumped five-fold to a record 66.82 percent, a side effect of central bank intervention to combat the yuan’s slump to a five-year low. Such efforts to influence market pricing are untenable if China wants to develop active offshore markets for financing and trade in the currency, according to Rabobank Group and Royal Bank of Canada………………………………………..Full Article: Source

The perils of China’s currency devaluation

Posted on 14 January 2016 by VRS  |  Email |Print

The recent decline in China’s currency, the renminbi, which has fuelled turmoil in Chinese stock markets and drove the government to suspend trading twice last week, highlights a major challenge facing the country: how to balance its domestic and international economic obligations. The approach the authorities take will have a major impact on the wellbeing of the global economy.
The 2008 global financial crisis, coupled with the disappointing recovery in the advanced economies that followed, injected a new urgency into China’s efforts to shift its growth model from one based on investment and external demand to one underpinned by domestic consumption………………………………………..Full Article: Source

Brazil’s Real Rises as Commodities Climb on Chinese Export Data

Posted on 14 January 2016 by VRS  |  Email |Print

Brazil’s real rose for a second day after retail sales unexpectedly rose and emerging-market currencies gained on a report showing Chinese exports increased. The real advanced 0.3 percent to 4.0167 per dollar Wednesday in Sao Paulo. The Bloomberg Commodity Index, which touched a record low on Tuesday, rose after China’s trade surplus widened and exports recovered. Commodities account for about half of Brazil’s exports.
China, Brazil’s top trading partner, imported a record amount of crude last year as oil’s lowest annual average price in more than a decade spurred stockpiling and boosted demand from independent refiners………………………………………..Full Article: Source

How ‘In God We Trust’ Got on the Currency in the First Place

Posted on 14 January 2016 by VRS  |  Email |Print

A lawyer filed suit in Ohio this week seeking to remove the phrase “In God We Trust” from U.S. currency. It’s far from a new fight, and as with many interactions between religion and the American state (like the “under God” part of the Pledge of Allegiance), the invocation of the almighty is newer than you might think.
“In God We Trust” was first added to U.S. coins during the beginning of the Civil War, when religious sentiment was on an upswing and concerned Americans wanted the world to know what their country stood for………………………………………..Full Article: Source

Latest oil slide triggers more bets against commodity currencies

Posted on 13 January 2016 by VRS  |  Email |Print

Bets against commodity-linked emerging currencies are on the rise again as crude prices fall to around $30 a barrel, but volatility remains well below the peaks of last year. Brent crude’s renewed tumble this year has put commodity exporters’ currencies on course to extend last year’s losses and some, such as the South African rand and the Mexican peso, have hit record lows.
The Russian rouble is inching lower too, 4 percent off record lows struck toward the end of 2014, and these spot market losses are filtering into options markets where investors can try to hedge against further weakness………………………………………..Full Article: Source

‘Murderous’ Yuan Rate Jolts Hong Kong as Top Currency Hub

Posted on 13 January 2016 by VRS  |  Email |Print

An unprecedented surge in the cost of borrowing in yuan in Hong Kong adds to questions about the outlook for the city’s role as the biggest offshore hub for the Chinese currency. The overnight yuan Hong Kong Interbank Offered Rate climbed 53 percentage points to 66.82 percent on Tuesday — a side-effect of a campaign by the People’s Bank of China to curb arbitrage between the offshore and onshore rates for the currency.
“A 66 percent rate is murderous for others being swept up in this who are not speculating,”said Michael Every, head of financial markets research at Rabobank Group. Central banks “usually win a round like this, but lose in the end,” he added………………………………………..Full Article: Source

Global currency markets are now dancing to China’s tune

Posted on 12 January 2016 by VRS  |  Email |Print

It has been a brutal start to the year for markets around the world - for several the worst start in their history. Stocks, currencies and commodities have taken a hammering. The Shanghai, Eurostoxx and Nikkei indexes were all down between 6% and 10% through the first week of the year, with palladium, oil and lead down in the same range.
Multiple currencies, including the South Korean won, Mexican peso, New Zealand dollar and South African rand, were down 2% to 4%. A key driver has been the devaluation of the Chinese yuan. Now, you might be wondering why a currency move in China is setting fire to markets across the globe………………………………………..Full Article: Source

China’s currency conundrum: Cause for alarm?

Posted on 12 January 2016 by VRS  |  Email |Print

Markets started 2016 in chaos: It was the worst start for the S&P 500 and the Dow Jones industrial average ever. Global stocks had their worst drop in more than four years, down more than 6 percent for the week.
A lot of it comes back to red alerts about China’s currency and what policymakers are trying to do. But is it justified? A growing chorus of economists and currency strategists suggests the weakness in the yuan may not be as scary as some believe………………………………………..Full Article: Source

Yen Weakens From 7-Month High as Currency Havens Lose Attraction

Posted on 12 January 2016 by VRS  |  Email |Print

The yen fell from its strongest level since August as China’s central bank kept the yuan’s daily fixing stable, damping demand for safer assets that built up in the new year during the Asian country’s market turmoil.
Japan’s currency declined against most of the major peers, while higher-yielding commodity currencies such as Australia’s dollar and Mexico’s peso rebounded. The yen rallied every day last week as turbulence in China’s financial markets rippled across stocks and commodities around the world, and stoked currency volatility to a three-month high………………………………………..Full Article: Source

The Myths of China’s Currency ‘Manipulation’

Posted on 11 January 2016 by VRS  |  Email |Print

Global equity markets have experienced steep declines since the new year, and many assert the devaluation of the yuan by the People’s Bank of China is a major cause of this week’s turmoil.
These devaluations have fueled long-standing outcries that China is playing dirty. Presidential hopeful Donald Trump, for example, recently claimed on these pages that “the wanton manipulation of China’s currency” is “robbing Americans of billions of dollars of capital and millions of jobs.”……………………………………….Full Article: Source

China-driven currency war would hurt Asia

Posted on 11 January 2016 by VRS  |  Email |Print

China’s decision to push the value of its currency lower has opened a new front of worry for global investors and consumers alike, namely a potential wave of currency devaluations among the so-called Asian tigers — South Korea, Singapore and Taiwan, sparking an Asian-wide currency war.
Such an outcome, foreign exchange specialists say, would further curb global growth expectations, which already are being revised downward as China’s once booming economy retrenches. The US dollar’s strong run recently — together with the plunge in the price of oil and other commodities — has damaged fragile emerging market economies such as Brazil, Turkey and South Africa………………………………………….Full Article: Source

Saudis told to prop up currency amid global devaluation war fears

Posted on 11 January 2016 by VRS  |  Email |Print

Investors are betting the kingdom’s dollar peg will soon collapse, but oil giant should deploy the full force of firepower to protect riyal, say World Bank. Saudi Arabia should use its massive foreign exchange reserves to defend the riyal, amid fears the world is descending into a new phase of global currency wars, the World Bank has said.
The kingdom’s shaky currency peg with the dollar has come under record pressure this week as the price of oil has plummeted to near 12-year lows at $32-a-barrel………………………………………..Full Article: Source

Is China really devaluing its currency?

Posted on 08 January 2016 by VRS  |  Email |Print

Markets have taken fright at the prospect a new round of currency wars. But the Chinese say they want a “stable” exchange rate. So what’s really going on? Since the summer, investors have been keeping an uneasy eye on the value of the Chinese currency.
In August, Beijing decided to tweak its exchange rate peg with the dollar, making the renminbi float in a wider band against the greenback. This sparked immediate market panic that China was entering into the world’s currency wars. But the devaluation in itself was small. Allaying fears further, the Chinese began to immediately intervene to prop up the RMB to stop it falling too fast by drawing down their reserves………………………………………..Full Article: Source

China’s currency devaluation and the global economy

Posted on 08 January 2016 by VRS  |  Email |Print

China devalued its currency to a five-year low against the US dollar on Wednesday, sending global stock markets tumbling. The devaluation so far has been minor, from an exchange rate of 6.2 to the dollar last summer to 6.55 now. So, why are markets so jittery?
First, look at what China says it is trying to do. Last month, China’s central bank started publicising a trade-weighted index of its exchange rate to highlight the fact that the currency has appreciated a lot. Ten years ago, there was broad agreement that China’s currency was seriously undervalued. ……………………………………….Full Article: Source

Mexico fears currency war after China’s yuan move

Posted on 08 January 2016 by VRS  |  Email |Print

Mexico warned on Thursday that China’s weakening of the yuan could trigger a global currency war, as the peso hit new lows against the dollar. The remarks by Finance Minister Luis Videgaray came after the People’s Bank of China weakened the yuan currency to the lowest level since March 2011.
“As the yuan moves, worries begin around the world that we could be entering a cycle of competitive devaluations, which is frankly a perverse phenomenon because if all countries end up devaluating, nobody will makes itself more competitive,” Mr Videgaray said………………………………………..Full Article: Source

$A plunges on China, commodities, US rate outlook

Posted on 07 January 2016 by VRS  |  Email |Print

The Australian dollar has plunged overnight in New York amid renewed concerns about China’s economic outlook, falling commodity prices and the US central bank’s determination to lift interest rates.
The currency’s tumble came hours after China lowered the yuan, stoking investor concern that weakness in the world’s second-largest economy will drag down global growth. The Aussie was 1.5 per cent lower at US70.52¢ in mid-afternoon trade in New York, after earlier falling as low as US70.49¢, compared with Wednesday’s local close of US71.20¢………………………………………..Full Article: Source

China sets yuan currency level near five-year low

Posted on 07 January 2016 by VRS  |  Email |Print

China’s central bank on Wednesday set the value of the yuan currency against the US dollar at its lowest since April 2011, according to the national foreign exchange market, raising worries over the health of the world’s second-largest economy.
The People’s Bank of China (PBoC) set the daily reference rate at 6.5314 to $1.0 on Wednesday, down by 0.22 per cent from the previous day, according to the China Foreign Exchange Trade System. It was its weakest for nearly five years. The move marked the seventh session the PBoC has weakened the yuan, reviving concerns over a shock devaluation of the currency in August, when it guided the unit down nearly five per cent in a week………………………………………..Full Article: Source

Are we in a phase where currency wars are normal?

Posted on 06 January 2016 by VRS  |  Email |Print

In calendar year 2015, the Indian rupee depreciated 4.90% against the US dollar from 63.03 to 66.15. It was the fifth straight year of rupee depreciation. Rupee typically depreciates 5.5% to 6% YoY and the trend has been visible since the last 5-7 years. The rupee was one of the best performers amongst its Asian and emerging market peers.
The rupee performed well even in comparison to the dollar index which gained 9% during the year and other G7 currencies which are running a divergent monetary policy vis-a-vis US dollar………………………………………..Full Article: Source

What did you do in the currency war, Daddy?

Posted on 06 January 2016 by VRS  |  Email |Print

The financial crisis and its immediate aftermath saw close cooperation among the world’s policymakers, especially central bankers. For example, in October 2008, the Federal Reserve coordinated simultaneous interest-rate cuts with five other major central banks. It also established currency swap arrangements—in which the Fed provided dollars in exchange for foreign currencies—with fourteen foreign central banks, including four from emerging markets.
However, once the crisis had passed and recovery begun, national economic interests began to diverge. In particular, some foreign policymakers argued that the Fed’s aggressive monetary policies, undertaken to support the U.S. economic recovery, were damaging their own economies………………………………………..Full Article: Source

In Currency Rout, Emerging Nations Save $2.8 Trillion War Chest

Posted on 05 January 2016 by VRS  |  Email |Print

Developing nations are embracing the greater competitiveness that comes with the beating their currencies have taken, leaving their rainy day funds untouched.
Foreign reserves in the 12 biggest emerging markets, excluding China and countries with pegged currencies, fell about 2 percent to $2.8 trillion in 2015, according to data compiled by Bloomberg. The actual decline may be smaller because the strengthening dollar reduced the value of other reserve currencies such as the euro………………………………………..Full Article: Source

New yuan trading hours: What you need to know

Posted on 05 January 2016 by VRS  |  Email |Print

China’s currency, the yuan or renminbi as it’s known, will see extended trading hours starting Monday in Beijing’s latest effort to promote its currency on the international stage.
Instead of ending at 4.30pm local time, trading will now continue until 11.30pm while opening hours remain unchanged at 9.30am. So, what does this all mean for the currency’s outlook? Here are the facts explained. The new hours will now overlap with Europe’s trading day as the mainland seeks to make the yuan more widely used globally………………………………………..Full Article: Source

Nairobi Residents Turn to Community Currency

Posted on 04 January 2016 by VRS  |  Email |Print

At the Sifa Primary School outside Nairobi, Kenya, students pay their tuition with a new, local currency called the pesa. The school is one of several institutions that accepts the community currency.
Teacher Josephine Ouma says the currency has made life easier. The currency is widely used by people in the Gatina Village where she lives. The pesas are equal in value to the Kenyan shilling and can be spent in the community just like cash………………………………………..Full Article: Source

China’s Currency Facing A New Set Of Challenges in 2016 After A Rocky Year

Posted on 04 January 2016 by VRS  |  Email |Print

China’s biggest challenge for 2016 may turn out to be one of the tools that helped enable its rapid rise as an export powerhouse: its currency. This year, Beijing scored a diplomatic coup when the International Monetary Fund integrated the renminbi, or yuan, into the basket of elite global currencies that it uses to track its members’ reserves.
Now, Chinese officials will have to manage the mix of financial, economic and diplomatic tensions arising from their ambitions to see the renminbi in wide use — at precisely the moment when those tensions are higher than ever — and prove themselves worthy of the honor………………………………………..Full Article: Source

The Renminbi Has No Chance to Become a Reserve Currency Until 2036

Posted on 30 December 2015 by VRS  |  Email |Print

The Chinese renminbi has been recently included in the IMF’s reserve currency basket, which previously consisted of the US dollar, the euro, the British pound, and the Japanese yen. These currencies represent the developed world’s most stable economies, so having the renminbi among them is a nice compliment to Beijing. It is not, however, an earth-shattering move in other respects.
Many people started asking me whether the Chinese currency will ultimately become the world’s reserve currency. In short, I don’t see the renminbi overthrowing the US dollar anytime in the next few decades. My crystal ball gets fuzzy after 2036, but for right now, it comes nowhere close to meeting the basic conditions for becoming the major reserve currency………………………………………..Full Article: Source

Russia’s stricken currency drops to 2015 low amid oil price slump

Posted on 30 December 2015 by VRS  |  Email |Print

Russia’s battered ruble on Tuesday continued its slide on the back of low oil prices, reaching a new 2015 low against the dollar and dropping to below 80 against the euro. The Russian currency stood on Tuesday at 72.85 against the dollar, down from 72.46 on Monday.
The ruble meanwhile stood at 80.02 against the euro, dropping below 80 for the first time since late August. The slide in oil prices and Western sanctions over Moscow’s role in the Ukraine crisis have pummeled the oil-dependent Russian economy in recent months. At his annual press conference earlier this month President Vladimir Putin assured the country could weather the headwinds, despite volatility in oil prices………………………………………..Full Article: Source

Pressure Grows on Saudi Arabia’s Currency

Posted on 30 December 2015 by VRS  |  Email |Print

Back in September I wrote an article here on Real Money talking about what could be shaping up as a currency crisis for Saudi Arabia. I explained that the Saudis were heavily short dollars, due to a surge in dollar-denominated loans. To make matters worse, of course, the continued crash in oil prices, largely of Saudi making, was only intensifying their dollar cash flow problem.
Recently, it was announced that the Kingdom was making huge cuts in subsidies to its citizens. Everything, from gasoline to power to water and monthly guaranteed income supports, will take a hit. The problems will continue to rise as long as oil prices stay down where they are………………………………………..Full Article: Source

The only global currency to crush dollar this year

Posted on 29 December 2015 by VRS  |  Email |Print

Bitcoin is up over 40 percent this year. The U.S. Dollar Index: a gain of 9 percent. The U.S. dollar has had a nice run. It’s been the talk of global currency trading all year long. And why not? After years of a weak greenback due to dovish Federal Reserve policy, the Dollar Index has extended big 2014 gains, up near-9 percent against a basket of major world currencies this year.
Some individual currency trades, like USD/Brazil Real, have netted currency investors huge returns. But to find what’s arguably been the best global currency in 2015, an investor might need to put quote marks around the term “global currency.”……………………………………….Full Article: Source

Zimbabwe Switches to Yuan as Reserve Currency

Posted on 29 December 2015 by VRS  |  Email |Print

Zimbabwe’s surprising recent announcement that it would shift to the Chinese yuan as its reserve currency is a sign of friendship with China, but probably not much more, say regional business people and economists.
The announcement last week raised eyebrows among economists outside the country. The nation’s finance minister touted the move as a huge advance in relations between the two nations, and noted that China would use the occasion to to cancel a bundle of debts, estimated at $40 million, that are due this year………………………………………..Full Article: Source

ETF Issuers with Currency-Hedged ETFs Ride High on Strong Dollar

Posted on 28 December 2015 by VRS  |  Email |Print

As the U.S. dollar strengthened throughout 2015, managers of currency-hedging exchange-traded funds had a banner year—they collected one of every four dollars invested in U.S. ETFs and rewarded their investors well.
Now, they are doubling down with plans for as many as 41 new currency-hedging funds on file with regulators. But many of those funds may come to market after the easy money in currency hedging has been made………………………………………..Full Article: Source

Forex Focus: commodity currencies had a bad year – and things may get worse

Posted on 28 December 2015 by VRS  |  Email |Print

The Canadian, Australian and New Zealand dollars and the South African rand have been among the worst performers in 2015. Sterling held up well in 2015 against most currencies apart from the US dollar. The first major change came with the General Election in May, when it was widely expected that there would be another coalition government of some sort. The outright Conservative win gave the pound a push higher even against the dollar.
The main reason for sterling’s strength was the hope that the Bank of England would raise interest rates this year. Debates about the timing of a rate hike both in the UK and US raged all year until the Federal Reserve Bank finally made the move at the last knockings of 2015 on December 16………………………………………..Full Article: Source

Pound is ‘most overvalued currency in the world’, analysts claim

Posted on 28 December 2015 by VRS  |  Email |Print

Analysts says sterling will remain vulnerable to further falls next year as government picks-up pace of spending cuts and Brexit vote looms. The pound is one of the most overvalued currencies in the world and will suffer next year as the Government ramps up spending cuts and uncertainty about Britain’s future in the EU weighs on growth.
Analysts at Deutsche Bank warned that the Bank of England may not be able to raise interest rates “at all” if Britain’s recovery slows. It believes the pound could fall as low as $1.27 next year and $1.15 in 2017 from about $1.485 today if the US Federal Reserve continues to tighten monetary policy and the Bank of England leaves interest rates on hold………………………………………..Full Article: Source

Rupiah Set to Reclaim Worst Asian Currency Mantle From Ringgit

Posted on 21 December 2015 by VRS  |  Email |Print

Indonesia’s rupiah is forecast to reclaim its position as Asia’s worst-performing currency on shrinking foreign-exchange reserves and the risk of capital outflows. After two years in which Malaysia’s ringgit weakened the most out of the region’s major currencies, the rupiah is seen dropping 6.2 percent against the dollar from Nov. 30 to the end of 2016, twice as much as the ringgit, according to a Bloomberg survey of strategists.
Indonesia’s currency declined the most among Asian emerging markets in 2012 and 2013, weakening 5.9 percent and 21 percent respectively, as commodity prices fell and tighter U.S. monetary policy triggered a flight from developing nations………………………………………..Full Article: Source

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