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Why China May Continue Depreciating Its Currency?

Posted on 13 June 2014 by VRS  |  Email |Print

So you’ve heard it all. The 3% decline of the Chinese currency this year is just a small blip. The Chinese central bank engineered the depreciation just to scare off the currency speculators. China’s RMB will return to its upward climb soon enough.
Maybe not, says Carl Huttenlocher, chief investment officer of Hong Kong-based US$2.4 billion-under-management multi-strategy hedge fund Myriad Asset Management………………………………………..Full Article: Source

Currency market rigging could become criminal offence

Posted on 12 June 2014 by VRS  |  Email |Print

Rigging the foreign exchange, bond and commodity markets could become a criminal offence, the government will warn the City on Thursday as part of its latest effort to clean up the financial markets after a wave of scandals and allegations relating to key benchmarks.
Criminal offences for manipulating these global markets, which are based in London, will be among measures considered in a year-long review being launched by the chancellor, which was immediately criticised by Labour for being too late. It follows steps in 2012 to allow prison sentences of up to seven years for anyone involved in rigging the key interest rate benchmark Libor………………………………………..Full Article: Source

Why The US Dollar Will Eventually Stop Being The World’s Reserve Currency

Posted on 12 June 2014 by VRS  |  Email |Print

Of course, the US Dollar isn’t the only currency that nations maintain reserves of. The Euro is also a major reserve currency and the Yuan is fast becoming a major reserve currency. But since the USA produces 22% of all world output it happens to play a particularly special role in the global economy.
By virtue of being the largest economy in the world the accumulation of US dollar denominated financial assets happens to dominate the global financial system. It’s sort of like being the top market share producer of a particular product in a particular industry. Other entities accumulate your products because you’re the top producer. And that changes over time. Market shares change and regimes shift with the evolving economy………………………………………..Full Article: Source

PBOC keeps yuan traders guessing as currency rallies

Posted on 11 June 2014 by VRS  |  Email |Print

Recent gains after five months of declines attest to policymakers’ new norm of valuation swings, with central bank tweaks adding to volatility. Mainland policymakers have been saying since February that two-way swings in the yuan are the “new norm”. A surprise surge in the currency shows that they mean it.
Twelve-month non-deliverable forwards, which traders use to speculate or hedge, strengthened 0.9 per cent against the US dollar this week, their biggest advance since January 2012………………………………………..Full Article: Source

Zambia’s currency poised to strengthen

Posted on 11 June 2014 by VRS  |  Email |Print

Zambia’s local currency, the Kwacha, is expected to strengthen further this week after the Central Bank intervened to save the currency which had depreciated significantly against major currencies, the Zambia Daily Mail reported on Tuesday.
The Zambian currency lost its strengthen to the extent of being labeled among Africa’s worst performing currencies by analysts when it weakened by as much as 2.3 percent during the last week of May………………………………………..Full Article: Source

World needs currency modernisation

Posted on 10 June 2014 by VRS  |  Email |Print

For some time now, there has been concern that central bankers have “run out of bullets”. Having lowered their policy rates to near zero, they have engaged in increasingly extravagant measures such as “quantitative easing” and “forward guidance”.
Given the fog cast over real economic activity by the financial crisis, it is difficult to offer a definitive assessment of just how well or badly those measures have worked. But it is clear that there must be a better way to do things. There is no longer any reason to let the zero bound on nominal interest rates continue to hamper monetary policy………………………………………..Full Article: Source

Keep calm and carry on is the message from currencies

Posted on 10 June 2014 by VRS  |  Email |Print

Keep calm and carry on is the broad message from the currency market thanks to the generous support of central banks. Borrowing a currency at low interest rates and buying a rival sporting much higher short term yields is a nice little earner for investors, so long as market volatility remains quiescent.
As the European Central Bank becomes more accommodative with negative deposit rates and further easing expected this summer, the backdrop remains enticing for carry trades. Particularly as the US Federal Reserve appears set to keep its benchmark rates at very low levels for some time, after a May jobs report merely met expectations and plenty of slack remains in the world’s largest economy………………………………………..Full Article: Source

Barbados disagrees its currency should be devalued

Posted on 09 June 2014 by VRS  |  Email |Print

Barbados’ government does not support devaluing the Caribbean island’s currency and says it is determined to maintain its fixed exchange rate with the U.S. dollar. The Barbados dollar has been pegged 2-to-1 to the U.S. dollar since the 1970s. But some analysts believe the currency of the economically struggling country should be devalued.
Moody’s Investors Service has downgraded the island’s government bond rating by two notches from Ba3 to B3, citing “anemic economic growth” and “limited prospects for improvement.”……………………………………….Full Article: Source

Currencies: Survival of the weakest

Posted on 06 June 2014 by VRS  |  Email |Print

So the ECB has introduced negative deposit rates, as was widely expected. Whether this will work to boost bank lending is open to question; Denmark had negative deposit rates and it acted as a tax on them, which they had to recoup from customers. But it might work to weaken the euro; the single currency has dropped 0.6% against the dollar at the time of writing.
(This may be because the ECB did quite a lot more than making rates negative; it added a loan facility for non-financial companies, for example.) David Bloom at HSBC says that The ECB has argued it does not have an exchange rate target, but it is clear that a weaker EUR will be a critical element in the ECB achieving its inflation target………………………………………..Full Article: Source

Currency wars, will there be a winner?

Posted on 06 June 2014 by VRS  |  Email |Print

The race among central bankers to be the biggest dove continues unabated (including Draghi’s efforts today), and as a result , a low-risk return on capital has become even more difficult for investors. There aren’t many major currencies whose central bank wouldn’t be happy to see a decline, and while Draghi was careful to mention that the exchange rate was not a policy target as such, we all know which direction would make him happier.
As mentioned earlier the search for yield has resulted in added demand for the higher yielding currencies like AUD and NZD. There has also been demand for precious metals which have been under the cosh for some time. It’s not that there is a fear of a return to high inflation, but now that the era of negative interest rates is upon us, it’s just difficult to find a home for cash………………………………………..Full Article: Source

Euro/Dollar Direction Post-ECB Meeting Will Drive Gold

Posted on 05 June 2014 by VRS  |  Email |Print

Gold traders will keep track of the direction the U.S. dollar and euro take after the European Central Bank meets Thursday, as how the two currencies react will determine gold’s direction.
There’s some uncertainty about what the ECB will do because it has several options available to adjust monetary policy. General expectations among currency analysts are that the ECB will cut refinancing rates between 10 to 15 basis points and likely cut the deposit rate to minus 0.1%………………………………………..Full Article: Source

Lithuania to adopt euro currency in 2015

Posted on 05 June 2014 by VRS  |  Email |Print

The European Commission and the European Central Bank have approved Lithuania’s application to join the euro currency union, positioning the Baltic state to become the bloc’s 19th member.
Lithuania is set to adopt the euro currency in 2015, following a decision by the European Commission and European Central Bank on Wednesday. The largest of the Baltic states and the last one to join the euro, Lithuania has managed to fulfill all of the requirements of joining the common currency, from tempering inflation to keeping its government deficit in check, the Commission said………………………………………..Full Article: Source

Brazil Tax Change Could Boost Sinking Currency

Posted on 05 June 2014 by VRS  |  Email |Print

The Brazilian government on Wednesday took steps that could shore up its sinking currency, in a move possibly aimed at controlling inflationary pressures. Brazil’s Finance Ministry reduced the reach of its 6% IOF financial-transactions tax in a bid designed to encourage local firms to obtain financing abroad. The IOF now applies only to international loans and bonds with maturities of 180 days or less, down from 360 days.
Analysts say the measure will give companies, particularly smaller ones, greater ability to raise cash abroad. In bringing foreign currency into the country, they’ll create more demand for Brazilian reais………………………………………..Full Article: Source

Libyan currency under pressure as chaos, budget crisis deepen

Posted on 04 June 2014 by VRS  |  Email |Print

Libya’s currency is under heavy pressure as a breakdown in security and a collapse of oil revenues due to port blockades have badly disrupted public finances and an economy already burdened by exploding state salary and subsidy bills.
Over the past two months, the dinar has fallen more than seven percent against the dollar on the black market, its first weakness since rebels demanding autonomy for eastern Libya seized oil export facilities 10 months ago………………………………………..Full Article: Source

Apple may try to include virtual currency transactions in applications

Posted on 04 June 2014 by VRS  |  Email |Print

Apple Inc will let software developers include virtual-currency transactions in their applications, paving the way for new forms of money to appear on iPhones and iPads.
“Apps may facilitate transmission of approved virtual currencies provided they do so in compliance with all state and federal laws for the territories in which the app functions,” Apple said in an update to its App Store review guidelines. Apple did not provide details on the approved virtual currencies………………………………………..Full Article: Source

How Currency-Hedged ETFs Stack Up

Posted on 03 June 2014 by VRS  |  Email |Print

With over 1,600 exchange-traded funds to choose from, investors can essentially tap into any corner of the investable universe. Perhaps one of the most popular markets has been ETFs that offer exposure to equities outside of the U.S.. Not only do these funds add great diversification benefits, but they are significantly less expensive than mutual fund options.
When it comes to adding global exposure, it is important for investors to realize how currency exposure can seriously impact bottom line returns. Most international equity ETFs effectively establish a long position in the local currency and a short position in the U.S. dollar. When the value of the dollar is declining, that exposure can work in favor of U.S. investors, as exchange rate fluctuations enhance their returns………………………………………..Full Article: Source

Bitcoin’s Futile Quest to Be a Currency

Posted on 03 June 2014 by VRS  |  Email |Print

Bitcoin is a fascinating and ingenious technology, but most promoters are mindful of neither the monetary nor the tax issues. For all practical purposes IRS regulations issued in March preclude bitcoins from being used as an alternative currency.
The IRS treats bitcoins as property. The result is that bitcoin transactions trigger a taxable event. Buyers incur a tax liability for the difference in dollars between what they paid for a bitcoin when they acquired it and the dollar value attributed to the bitcoin when they spend it. Sellers of course are subject to a tax based on the dollar value of the bitcoins they receive for a good or service………………………………………..Full Article: Source

Russian ruble becomes only valid currency in Crimea

Posted on 03 June 2014 by VRS  |  Email |Print

The Russian ruble has officially become the only valid currency in Crimea, with the Ukrainian hryvnia being given the status of a foreign currency. The move is another step toward closer integration with Russia.
From June 1 all settlements and payouts in the peninsula, including salaries, pensions and social benefits will be done in Russian rubles, Vedomosti says citing the Central Bank of Russia (CBR)………………………………………..Full Article: Source

Bitcoin: Currency or commodity?

Posted on 02 June 2014 by VRS  |  Email |Print

Last fall we saw bitcoin receive an unusual amount of attention. The upstart crypto currency had an exponential rise from $125 to more than $1,125 per unit on Bitstamp, only to fall back below $500 this spring (see “It’s a $, it’s a €, it’s cryptocurrency,” right).
Additionally, the closing and bankruptcy of the Tokyo-based Mt. Gox (the largest bitcoin exchange with more than 600,000 customers) garnered substantial negative press and threatened the stability of bitcoin…………………………………….Full Article: Source

Bitcoin’s Futile Quest to Be a Currency

Posted on 02 June 2014 by VRS  |  Email |Print

Bitcoin is a fascinating and ingenious technology, but most promoters are mindful of neither the monetary nor the tax issues. For all practical purposes IRS regulations issued in March preclude bitcoins from being used as an alternative currency.
The IRS treats bitcoins as property. The result is that bitcoin transactions trigger a taxable event. Buyers incur a tax liability for the difference in dollars between what they paid for a bitcoin when they acquired it and the dollar value attributed to the bitcoin when they spend it. Sellers of course are subject to a tax based on the dollar value of the bitcoins they receive for a good or service…………………………………….Full Article: Source

International Currency Exchange up for sale

Posted on 02 June 2014 by VRS  |  Email |Print

Family-owned Lenlyn to offload ICE, one of the world’s largest bureau de change businesse, and its sister brand, Raphaels Bank. International Currency Exchange, one of the world’s largest bureau de change businesses, is up for sale just weeks after rival Travelex was sold to the owner of UAE Exchange for £1bn.
ICE, and its sister brand, Raphaels Bank, have been placed on the block after their parent company hired KPMG to sell them. Lenlyn Holdings, the family-controlled company which owns the pair, hired the accountancy firm to run an auction for the two brands following what is understood to have been a beauty parade of eight potential advisers…………………………………….Full Article: Source

Is Aussie Dollar ETF in Trouble?

Posted on 30 May 2014 by VRS  |  Email |Print

The Australian economy which has enjoyed steady growth over two decades has lately been witnessing a slump. Commodity abundance was the one of major driving forces of Australia – especially the base metals and energy product – that assisted the nation to dodge recession during the global financial meltdown.
However, slowdown in China, a major importer of Australian natural resources, falling prices of iron ore – Australia’s largest export, faltering consumer confidence thanks to government spending cuts and new tax burden in a 2014/15 federal budget have lately affected the nation’s growth………………………………………..Full Article: Source

Possible currency union within Eurasian Economic Union to be considered in future

Posted on 30 May 2014 by VRS  |  Email |Print

The issue of creating a currency union on the basis of the Eurasian Economic Union may be considered in the future, Russian First Deputy Prime Minister Igor Shuvalov said on Thursday.
“Sometime in future, we will have to look seriously at creating a financial union, or maybe even a currency union,” he said. “So far, this issue is outside the current agenda.” The Eurasian Economic Union Treaty was signed by the leaders of Russia, Belarus and Kazakhstan on Thursday………………………………………..Full Article: Source

Paper money is unfit for a world of high crime and low inflation

Posted on 29 May 2014 by VRS  |  Email |Print

Has the time come to consider phasing out anonymous paper currency, starting with large-denomination notes? Getting rid of physical currency and replacing it with electronic money would kill two birds with one stone.
First, it would eliminate the zero bound on policy interest rates that has handcuffed central banks since the financial crisis. At present, if central banks try setting rates too far below zero, people will start bailing out into cash. Second, phasing out currency would address the concern that a significant fraction, particularly of large-denomination notes, appears to be used to facilitate tax evasion and illegal activity………………………………………..Full Article: Source

Scotland: Separate currency ‘most likely’

Posted on 29 May 2014 by VRS  |  Email |Print

A separate currency is the most likely option for an independent Scotland, according to a report from Barclays. The report considers four currency options if Scotland votes Yes in the referendum, including a formal monetary union with the UK, an informal monetary union with the UK or so-called Sterlingisation, joining the euro area, and an independent currency under various monetary regimes.
The bank said it takes no stand on the political question of how Scotland should vote or which outcome is in the best interests of Scotland economically………………………………………..Full Article: Source

Renminbi is far from being a reserve currency

Posted on 29 May 2014 by VRS  |  Email |Print

Scarcely a week passes without news about the ascendance of China’s currency, the renminbi. But China has a long way to go before its currency can rival — let alone displace — the dollar as the dominant global reserve currency.
To be sure, China already plays a significant role in international trade and finance, with major financial centres like London and Frankfurt eagerly lining up for renminbi business. Recent speculation that China’s economy may soon be as large as America’s has boosted this interest further, causing many to believe — whether ruefully or gleefully — that the renminbi will soon dominate………………………………………..Full Article: Source

Currency Chaos in Venezuela Portends Write-Downs

Posted on 28 May 2014 by VRS  |  Email |Print

Doing business in any foreign country can be risky. Then there’s Venezuela. With the highest inflation rate in the Americas and at least five currency devaluations in the past decade, the South American country is a corporate guessing game.
In just over a year, Venezuela has concocted a system of three exchange rates, fueling a black market for greenbacks. While many multinational companies continue to cling to more-favorable exchange rates for accounting purposes, those days may be numbered………………………………………..Full Article: Source

Mexico central bank: No fears of ‘currency war’

Posted on 28 May 2014 by VRS  |  Email |Print

Mexico has enough currency reserves to withstand “jittery spirits” in currency markets, according to the Governor of the Bank of Mexico, Agustin Carstens, who brushed off fears of a “currency war”.
Carstens said he had faith in the U.S. Federal Reserve, which he believed had gone out of its way to reassure markets and stress that central banks should focus on growth and recovery rather than exchange rates………………………………………..Full Article: Source

Currency swings take toll on consumer groups and manufacturers

Posted on 27 May 2014 by VRS  |  Email |Print

Peroni and pushchairs may not have much in common. But SABMiller, the brewer, and Mothercare, the babywear and buggy retailer, share one problem: both are battling to contain the effect of currency fluctuations on their business.
Last year’s slide in the South African rand – along with currency weakness in Australia, Colombia, Peru and elsewhere – cost SABMiller some $400m in the year to end March, the group reported on Thursday. Mothercare meanwhile said depreciation in the rouble and other currencies would eat into the royalties they earn on international sales that now represent more than 60 per cent of group network sales………………………………………..Full Article: Source

Is bitcoin a viable currency? It’s probably too volatile

Posted on 27 May 2014 by VRS  |  Email |Print

While bitcoin remains a hot-button issue, most of the talk has centered on the technology of this virtual currency. There are lots of questions: Is bitcoin really secure? Is it truly anonymous? Can it be counterfeited? Are transaction costs actually lower?
I have a more fundamental question: Is bitcoin a viable currency? My answer is no, and not just because of the wild fluctuations in the value but because these fluctuations are destined to continue. A good currency serves three purposes………………………………………..Full Article: Source

Narendra Modi effect: Indian rupee best performing Asia-Pacific currency

Posted on 26 May 2014 by VRS  |  Email |Print

Boosted by capital inflows and euphoria around the incoming government, Indian rupee’s surge to 11-month high levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014.
With a gain of about 5.3 per cent since the start of this year, Indian rupee has sprinted ahead of its other Asia-Pacific peers, including Indonesia’s rupiah and New Zealand dollar, in terms of year-to-date rise, shows an analysis of various currencies vis-a-vis the Greenback………………………………………..Full Article: Source

Russia and China join forces in “de-dollarization” of currency reserves

Posted on 26 May 2014 by VRS  |  Email |Print

According to the statement made by Vladimir Putin during his recent visit to Shanghai, Russia and China have reached an unprecedented level of cooperation that encompasses aspects ranging from energy trading to military drills.
Moreover, the Russian President suggests that the two countries are working together in order modify the existing practices regarding currency reserves management. Washington should be very concerned………………………………………..Full Article: Source

India: Currency exchange course

Posted on 23 May 2014 by VRS  |  Email |Print

The board of the BSE, the largest shareholder in the United Stock Exchange (USE), has decided to merge the struggling currency bourse with itself, a move that will boost its own stressed currency trading business that is dominated by rival National Stock Exchange.
When contacted today, a spokesman for the Bombay Stock Exchange (BSE) confirmed the board approval for the merger and said it would soon seek approvals from Sebi and other regulatory bodies. The spokesman said the move was backed by the USE board. However when contacted, a USE spokesman declined to comment……………………………………..Full Article: Source

Russia and China to Expand Transactions In National Currencies

Posted on 23 May 2014 by VRS  |  Email |Print

Russia’s biggest lender, Sberbank, and the state-owned Bank of China on Thursday finalized a deal to increase cooperation in trade financing and transactions in national currencies, Sberbank said in an online statement.
As part of the agreement, which was concluded at the St. Petersburg International Economic Forum, Sberbank and its clients will have easier access to China’s financial markets to carry out transactions in national currencies. Sberbank can also diversify its currency reserves to include yuan, the statement said……………………………………..Full Article: Source

EM currencies benefit as investors return

Posted on 23 May 2014 by VRS  |  Email |Print

A year after Ben Bernanke’s first mention of tapering triggered a panic in emerging markets, a rush back into higher-yielding assets is allowing central banks to scale back measures put in place to support their currencies in the worst of the sell-off.
On Thursday, Turkey’s central bank cut its main interest rate, citing “lessening uncertainty” and an improvement in Turkey’s risk premium indicators. Although the cut came as a surprise, with some analysts worrying that the central bank was pandering to pre-election political pressure in the face of persistent inflation, the lira strengthened 0.5 per cent to 2.0860 against the dollar……………………………………..Full Article: Source

Rogoff Examines the Upsides of a Currency-Free Economy

Posted on 22 May 2014 by VRS  |  Email |Print

Would getting rid of paper money give central bankers more room to maneuver? Harvard economist Kenneth Rogoff thinks so. In a new paper, “Costs and Benefits to Phasing Out Paper Currency,” Mr. Rogoff doesn’t take a position on the merits of replacing dollars or euros or yen with electronic currency. But he argues that doing so would make life easier for monetary policy makers hemmed in by the extraordinarily low interest rates of the post-recession economy.
Since lowering nominal interest rates to nudge the U.S. out of the 2007-2009 recession, Federal Reserve policymakers have been “going through contortions trying to run monetary policy” while nominal interest rates are at or near zero,” Mr. Rogoff said in an interview………………………………………Full Article: Source

10 things you should know about Bitcoin and digital currencies

Posted on 22 May 2014 by VRS  |  Email |Print

Bitcoin and other digital currencies have emerged as potential disruptors to the financial system, but fear, theft, and illegal activity still hang over them. Here’s what you need to know.
Bitcoin has injected itself into a lot of conversations about the future of technology, economics, and the internet. The future of digital currencies remains a controversial topic. After reading these 10 things to know about the confusing world of digital currencies, you’ll feel confident joining the conversation………………………………………Full Article: Source

After rupee crisis, RBI shores up currency’s defences

Posted on 21 May 2014 by VRS  |  Email |Print

Even as money floods into the country, the Reserve Bank of India (RBI) is bracing for the worst, building up currency reserves and drafting a game plan to protect the rupee against the sort of rout that alarmed policymakers and investors last year.
RBI Governor Raghuram Rajan is reviewing its exchange rate policy, three officials with knowledge of the matter said, after the rupee’s drop to a record low in August spurred criticism that it was ill-prepared to manage a heavy sell-down by foreign investors………………………………….Full Article: Source

FT: Currency Wars Heat Up Again

Posted on 21 May 2014 by VRS  |  Email |Print

A year after G-20 finance ministers agreed to end their currency wars, competitive devaluations are back in style. European Central Bank President Mario Draghi called the euro’s strength a “serious concern” last week, and officials in Australia, Canada and New Zealand have been making noise about weakening their currencies for weeks, the Financial Times reports.
China moved strongly to push down the yuan during the first quarter, spending an estimated $100 billion-plus in direct market intervention. Other emerging market governments are apparently fighting off currency strength too, including India, Brazil and South Korea, according to the Times…………………………………..Full Article: Source

Dollar denominated versus local currency

Posted on 20 May 2014 by VRS  |  Email |Print

Before investing in emerging market debt, investors should understand the advantages and disadvantages of local currency versus dollar denominated. Robert Simpson, portfolio manager in the emerging market debt team at Insight Investment, says the decision to invest in either local or hard currency is dependent on environment.
“The pros of local currency investing are that the investor is able, to a certain extent, to isolate the factors that will drive interest rate markets in a country and therefore it’s less susceptible, in theory, to US Treasury moves or the whims of international capital flows,” he explains. “The more developed the country, the more developed its domestic financial institutions are and the greater proportion of domestic debt is held by domestic investors.”……………………………………Full Article: Source

Canada faces a currency conundrum

Posted on 19 May 2014 by VRS  |  Email |Print

Canada’s central bank may want to kick-start its tightening cycle to fine-tune growth and inflation, but a stronger dollar could upset its plans. Canada’s recovery is picking up steam and inflation is creeping higher. In reality, the country should be steeling itself for higher interest rates ahead.
That is not what the Bank of Canada has in mind. Interest rates are sitting squarely in a neutral position for the foreseeable future. The central bank is perched on the fence and it wants the market to think a rise in rates is just as likely as a cut…………………………………….Full Article: Source

Currency Cold War is starting to heat up

Posted on 19 May 2014 by VRS  |  Email |Print

The last round of “currency wars” ended a year ago in an uneasy truce, when G20 finance ministers agreed not to target their exchange rates for competitive purposes. Fears of a round of competitive devaluations evaporated soon afterwards. The US Federal Reserve announced plans to taper its emergency stimulus and many emerging markets have instead been battling to prop up their currencies.
Now, though, central banks are again stepping up the rhetoric on exchange rates. The talk in markets is of a “cold” currency war and of tensions growing beneath the surface of G20 unity…………………………………….Full Article: Source

China’s Currency Not Dying, Deutsche Bank Says

Posted on 19 May 2014 by VRS  |  Email |Print

The Chinese yuan is second only to the Russian ruble as the worst performing BRIC currency compared to the dollar. It’s down nearly 3% to the greenback this year, while the Brazilian real is up 6.3% and the Indian rupee is up 5.4%. Even the Mexican peso is doing better, up 1.12% against the dollar.
Yet, some pundits will have investors believing that the weaker yuan signals the ongoing decline of the Chinese economy. For them, the yuan’s days of strengthening are over as Beijing opts for a weaker currency to keep cheap exports flowing Westward…………………………………….Full Article: Source

A stronger pound means an even more unbalanced economy

Posted on 16 May 2014 by VRS  |  Email |Print

“A Britain carried aloft by the march of the makers”. So George Osborne, the chancellor of the exchequer, used to describe his vision for the economy. The plan was for a revival in manufacturing and exports, driven, at least in part, by a weaker pound. Sterling had fallen by 30% during the financial crisis as traders bet that Britain, with its large financial sector, would be hit harder than most countries.
But since early 2013 the pound has climbed back, appreciating by 10% in trade-weighted terms (see chart). In some ways this is splendid news. It reflects the strength of GDP growth in Britain, which is now the strongest in the G8, as well as the expectation that interest rates will rise sooner as a result. Sterling looks like a relatively safe and stable storehouse for foreign cash as emerging markets wobble. But what does it mean for the British economy?……………………………………….Full Article: Source

Major Moves Underway in Currency ETFs

Posted on 15 May 2014 by VRS  |  Email |Print

Volatility is at multi-year lows for the Euro, yet the EUR/USD–and by extension the CurrencyShares Euro Trust–is very close to a major breakout point, as is the Yen. The Canadian and Australian dollars are seeing an uptick in volatility, compared to a year ago, and have also begun significant and potentially long-term trends.
Currency trusts provide a way for non-forex traders to participate in these moves, in an asset that trades like a stock………………………………………..Full Article: Source

Will Clean Energy ETFs Bounce Back?

Posted on 15 May 2014 by VRS  |  Email |Print

Clean or renewable energy stocks have seen choppy trade since a couple of months as investors are fleeing high growth and high beta stocks on valuation concerns and profit-taking activity.
While the sluggish trend that stemmed from the broad sell-off could continue in the near term, the long-term outlook seems bright. This is especially true as global warming and high fuel emission issues are leading to rising popularity of clean energy sources……………………………………….Full Article: Source

Why Euro is weakening and Dollar getting stronger?

Posted on 15 May 2014 by VRS  |  Email |Print

US dollar has become stronger on economic recovery expectations but also on worsening scenario in Germany and Eurozone. The Zew Indicator of Economic Sentiment fell 10.1 points to 33.1 points (historical average 24.7 points). The economic expectations for the Eurozone has also lost ground in May. The respective indicator declined by 6 points and stands at 55.2 points. The indicator for the current economic situation in the Eurozone gained 4.9 points reaching a level of minus 25.6 points.
Zew Institute noted that the decline of economic expectations should be seen against the backdrop of astorng economic development in the first quarter of 2014. Already there are indications that Germany will no tbe able to maintain this fast pace of growth………………………………………..Full Article: Source

Osborne warns of SNP currency disaster

Posted on 15 May 2014 by VRS  |  Email |Print

George Osborne reinforced his opposition yesterday to a currency union with an independent Scotland and warned Alex Salmond that the alternative of using the the pound without an agreement would be “disastrous” for the new nation’s financial services sector.
In a bullish performance in front of a Westminster committee, the chancellor defended his decision to rule out a sterling zone………………………………………..Full Article: Source

China achieves economic growth by printing more currency?

Posted on 14 May 2014 by VRS  |  Email |Print

China’s economic growth relies heavily on investment, which means that it requires major injections of capital. One of the ways China achieves that is by increasing the money supply - literally, printing more currency (the renminbi, or the yuan, as the unit is more colloquially known).
“In the past 30 years,” explained a government economist, Wu Xiaoling, in 2011, “we have used excessive money supply to rapidly advance our economy.” At the end of 2013, the excess of money supply totaled 110.65 trillion yuan ($17.77 trillion), four times more than 10 years earlier - a clear sign that the government is printing money faster than the economy is expanding………………………………………..Full Article: Source

Scottish Independence: Is Bitcoin the Solution to Currency Problems?

Posted on 14 May 2014 by VRS  |  Email |Print

A Scottish retailer will only use bitcoin for three days this week in a bid to test out whether the cryptocurrency has the potential to take over from pound as the country’s new currency in the event of independence.
CeX, the second-hand electronics, DVD and video game store, has turned its Glasgow Sauchiehall store into a “pound-free zone” for the next three days, only accepting bitcoin as payment for any good bought - as well as only paying customers in bitcoin………………………………………..Full Article: Source

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