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Zimbabwe phases out local currency at 35 quadrillion to US$1

Posted on 16 June 2015 by VRS  |  Email |Print

Zimbabwe has started retiring its almost worthless local currency in favor of the US dollar. Today, 35 quadrillion Zimbabwean dollars are equal to US $1, as a result of hyperinflation which hit the country in 2009.
The demonetization process of the Zimbabwe dollar started on Monday and will run till September 30. People with accounts of up to 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars will be paid $5. Those who preserved bills at home will receive a rate of 250 trillion to $1 for their 2008-issued notes and 250 to $1 for their 2009-issued notes………………………………………..Full Article: Source

China Rallies Around Yuan as IMF Mulls Reserve-Currency Inclusion

Posted on 16 June 2015 by VRS  |  Email |Print

China’s central bank is preparing to take new steps to lift the global profile of the yuan as the International Monetary Fund reviews whether to grant it elite status as a reserve currency.
In a report issued late last week, the People’s Bank of China detailed moves it will take to encourage the IMF to take that step, putting the currency on a par with the dollar, euro, yen and pound sterling. Reserve status could potentially encourage other central banks to increase their holdings of the currency………………………………………..Full Article: Source

Renewed EM currency volatility

Posted on 15 June 2015 by VRS  |  Email |Print

Three weeks ago we wrote that the US dollar appears to be consolidating after staging one its longest dollar bull-runs since the 1990s (see Is the US dollar bull run over?, May 25. 2015). But while the US dollar index steadied as the Euro rallied the past three weeks, EM currencies continued their decline against the greenback. The strong US jobs data in May and the increased likelihood of higher US interest rates later this year have rekindled concerns over EM countries with high fiscal account and current-account deficits.
US monetary policy normalization: In last week’s article (see Bond yields rising, June 8, 2015), we mentioned that we are now seeing the initial stages of interest rate normalization. This may result in increasing volatility across markets over the short-term. As bond yields rise due to the prospect of the Fed rate hike later this year, global investors have slowly been deleveraging and moving money out of riskier EM assets this year………………………………………..Full Article: Source

Merkel reignites ‘currency war’ worries

Posted on 15 June 2015 by VRS  |  Email |Print

German chancellor Angela Merkel has reignited fears that world leaders are stoking currency wars by saying that recent strengthening in the euro was making it harder for eurozone countries such as Spain and Ireland to reform.
Her words had an immediate impact on the euro, sending it down 0.9 per cent against the dollar to $1.1150, although the single currency recovered that loss yesterday afternoon. The euro had already come under pressure as worries over a Greek exit from the eurozone weighed on investors………………………………………..Full Article: Source

The new currency trade: Short the Kiwi

Posted on 12 June 2015 by VRS  |  Email |Print

Currency analysts are betting on continued declines for the New Zealand dollar as officials fight to boost growth in a country that was heralded 2014’s rockstar economy. The Kiwi sank over 2 percent to a near five-year low of 70 U.S. cents Thursday after the Reserve Bank of New Zealand (RBNZ) lowered the benchmark cash rate by 25 basis points for the first time in four years.
“Today’s announcement is significant for NZD because it marks the beginning of what could turn into a more prolonged easing cycle. Desynchronization of monetary policy should not only drive NZD/USD below 70 cents but take it lower against many other major currencies,” said Kathy Lien, managing director of FX strategy at BK Asset Management………………………………………..Full Article: Source

Currency Exchanges to Begin as Zimbabwean Dollar Dies

Posted on 12 June 2015 by VRS  |  Email |Print

Zimbabweans will start exchanging “quadrillions” of local dollars for a few U.S. dollars next week as President Robert Mugabe’s government discards its virtually worthless national currency, the central bank said Thursday.
The southern African country started using foreign currencies like the U.S. dollar and South African rand in 2009 after the Zimbabwean dollar was ruined by hyperinflation, which hit 500 billion percent in 2008. At the height of Zimbabwe’s economic crisis in 2008, Zimbabweans had to carry plastic bags bulging with bank notes to buy basic goods like bread and milk. Prices were rising at least twice a day………………………………………..Full Article: Source

People’s Bank of China: Global use of yuan to expand steadily in 2015

Posted on 12 June 2015 by VRS  |  Email |Print

China will continue to push for the yuan’s inclusion in the International Monetary Fund’s currency basket, known as Special Drawing Rights (SDRs), the People’s Bank of China (PBOC) said in a report on yuan internationalisation.
China will also encourage foreign central banks to include yuan assets in their forex reserves, it said. Foreign central banks held about 666.7 billion yuan ($107.42 billion) in yuan-denominated assets by the end of April………………………………………..Full Article: Source

Yen soars after BoJ’s Kuroda says currency “very weak”

Posted on 11 June 2015 by VRS  |  Email |Print

The yen surged to a two-week high against the dollar on Wednesday after the head of the Bank of Japan said the currency was unlikely to fall further because it was already “very weak”, prompting investors to trim huge bets against it.
As oil prices jumped on a report that U.S. oil production was levelling off after years of sharp increases, commodity currencies such as the Canadian and Australian dollars soared by over 1 percent against their U.S. counterpart………………………………………..Full Article: Source

Brazil’s central bank reduces rollover pace of currency swaps

Posted on 11 June 2015 by VRS  |  Email |Print

Brazil’s central bank decided on Wednesday to reduce the rollover pace of currency swaps that mature early next month, a move that is likely to weigh on the Brazilian real.
The bank said in a statement it will auction on Thursday as many as 6,300 currency swaps to roll over similar contracts that mature on July 1. Since the beginning of the month, the central bank had been offering as many as 7,000 contracts per day………………………………………..Full Article: Source

US senators call for currency retaliation over China hacking

Posted on 10 June 2015 by VRS  |  Email |Print

The International Monetary Fund should hold off including China’s currency in a policy basket in retaliation for hacking attacks on the US, two senators have demanded. In a letter on Tuesday to Christine Lagarde, the IMF’s managing director, Charles Schumer and Lindsey Graham said an attack on the records of 4m US government employees that had been blamed on China deserved to be punished.
“This recent cyber attack is one of China’s most brazen yet,” Mr Schumer said. “It is long past time for the international community to rally together and make crystal clear to the Chinese government that if they want to be treated as a leading nation on the global stage, then they need to start acting like it………………………………………..Full Article: Source

RMB looks to enjoy ‘special currency’ status

Posted on 10 June 2015 by VRS  |  Email |Print

According to Reuters news agency, the Group of Seven (G7) Finance Summit has formally agreed on May 29 that they would permit the RMB currency to be included in the ‘Special Drawing Rights’ (SDR) currency basket after a technical review is conducted by the International Monetary Fund (IMF). Beijing believes that the RMB has made tremendous progress and deserves to join the SDR. Nonetheless, the IMF technical review could still cause delays.
Critics claim that China’s capital account is not completely open and the RMB is not fully-convertible, which would impact the formation mechanism of the RMB exchange rate market. Yet, those concerns should not be direct obstacles to RMB’s inclusion in the SDR. How will the IMF determine if the RMB should receive SDR status?……………………………………….Full Article: Source

African currencies feel the heat as commodities drop

Posted on 10 June 2015 by VRS  |  Email |Print

One minute you’re hot, the next you’re not. That sums up the situation many African currencies are in. Ghana, Uganda, Angola and Tanzania are among the countries which have seen their currencies tumble to fresh lows against the dollar this week, as investors - who have flocked to the continent in recent years - pare their bets.
Here’s a quick snapshot of some of the worst performers in 2015: The Ghanian cedi is down 24 per cent this year. The Tanzanian shilling is 21 per cent weaker. The Angolan kwanza has fallen 12 per cent. Other currencies have also been hit, with the South Africa rand falling to a record low last week and the Nigerian naira not far from an all-time low reached earlier in February following an official devaluation last year………………………………………..Full Article: Source

The birth of new reserve currencies

Posted on 09 June 2015 by VRS  |  Email |Print

Some 95 per cent of all global foreign exchange reserves are invested in just four currencies: the US dollar, the euro, the yen and sterling. The central banks of the ‘Big Four’ are all expanding their balance sheets or have been doing so for years with no sign of immediate reversal.
They are all trying to convert huge debt problems into inflation problems, and when they succeed their currencies will weaken sharply. In this currency war, EM central banks risk suffering the most collateral damage. Their reserves – so many of them held in the big four currencies – will be decimated in purchasing power terms………………………………………..Full Article: Source

Turkish currency plunges on shock election result

Posted on 09 June 2015 by VRS  |  Email |Print

President Recep Tayyip Erdogan’s ruling AK Party loses parliamentary majority sending the Turkish lira and stock market into a tailspin. The Turkish currency has fallen sharply against the pound in foreign exchange markets and investors have taken fright sending shares lower after a shock result in the country’s election.
The Turkish lira fell to an all-time low as it slumped 5.1pc to 4.2738 lira to the pound, and the Turkish index of 100 leading shares dived 6.3pc lower early trading. At the start of the year £1 was worth 3.6 Turkish lira, and after the surprise election result holidaymakers money now goes 16pc further with £1 worth about 4.3 Turkish lira………………………………………..Full Article: Source

Will Former Soviet Republics Adopt A Single Currency?

Posted on 09 June 2015 by VRS  |  Email |Print

Given the eurozone’s many woes, it’s hard to imagine why another region would want to embark on a unified currency project. But the world is full of surprises. On May 29, at a summit in Kazakhstan, Russian Prime Minister and former President Dmitry Medvedev announced that the Eurasian Economic Union (EEU) would “consider the possibility and conditions of launching a monetary union in the long term.”
RT and Sputnik, both owned by the Russian state and widely decried as Kremlin propaganda outlets, reported the story in broadly the same terms. This is not the first time the idea of a single currency has been floated. According to Business New Europe, Putin called for member states to work towards a single EEU currency twice in March………………………………………..Full Article: Source

Currency volatility increases credit risk for exporters

Posted on 08 June 2015 by VRS  |  Email |Print

A weaker yen and euro might be good news for Hongkongers shopping in Japan and Europe but it is bad news for trading companies as volatile currency markets could see more companies failing to pay bills on time. “Currency volatility is a key risk for the credit and payment markets this year,” said Fabrice Desnos, the Asia-Pacific head of credit insurer Euler Hermes.
Desnos said many currencies that had traditionally been considered safe and stable had exhibited high degree of volatility. The Swiss franc rose 30 per cent against the euro in January after a cap was removed, before dropping back to a gain of about 20 per cent………………………………………..Full Article: Source

Russia’s Sberbank Lending In Chinese Currency

Posted on 08 June 2015 by VRS  |  Email |Print

Russia’s biggest commercial lender is issuing letters of credit in the Chinese yuan. Sberbank said Friday that it has teamed up with the Export Import Bank of China to grant its first line of credit in yuan to Russian pharmaceutical giant Pharmasyntez. The company approached Sberbank about opening a yuan credit line in order to pay for pharmaceutical goods it imports from China.
Russian state media hopped all over the announcement this weekend. RT in particular exists to report about how awful the U.S. and European Union are. And after Russia discovered China this year, the Russian neighbor has become like a new exotic girlfriend being rubbed in the face of the ex………………………………………..Full Article: Source

IMF may include RMB in currency basket in November

Posted on 08 June 2015 by VRS  |  Email |Print

In November 2015, the International Monetary Fund will conduct another round of screening procedures on whether to include the renminbi in the currency basket of its special drawing rights (SDR), almost five years since the last screening, the Beijing-based Economic Observer reports.
On May 26, the IMF, after ending its evaluation on China’s economy, said the renminbi over the past year has seen its real effective exchange rate (REER) appreciate sharply, signaling that the currency is no longer undervalued. This is the first time the IMF has not judged the renminbi to be undervalued, indicating that the currency has a good chance of being included in the SDR currency basket in November………………………………………..Full Article: Source

New ETFs Marry Currency Hedging and Dividends

Posted on 05 June 2015 by VRS  |  Email |Print

It has been established that investors like dividend exchange traded funds and it has been affirmed this year that there is plenty of affinity for currency hedged funds. After all, four of the top 10 asset-gathering ETFs on a year-to-date basis are currency hedged products.
The two concepts have been previously married in single ETFs and WisdomTree (NasdaqGS: WETF) adds to the group of currency hedged dividend funds today with the debuts of the WisdomTree International Hedged SmallCap Dividend Fund (NYSEArca: HDLS) and the WisdomTree Global ex-U.S. Hedged Dividend Fund (NYSEArca: DXUS)………………………………………..Full Article: Source

The currency hedging trade is starting to fade

Posted on 05 June 2015 by VRS  |  Email |Print

The trendiest trade of 2015 has lost some of its mojo lately. With global central banks in overdrive to devalue and the U.S. heading in the opposite direction, investors had been piling into exchange-traded funds that hedged against big currency moves.
Four of the top 10 ETFs this year in terms of fund inflows are related to currency hedging. That includes the most popular one, the WisdomTree Europe Hedged Equity, which has taken in $13.6 billion, according to ETF.com. The fund is up a gaudy 16.8 percent year to date but is down 2.5 percent over the past week and off 0.4 percent for the month. The funds often use a balance of dividend-paying and export-based companies to hedge currency exposure………………………………………..Full Article: Source

Here’s the next stage in global currency wars

Posted on 05 June 2015 by VRS  |  Email |Print

The race for a devalued currency is set for a new set of twists and turns this summer as analysts contemplate how the U.S. Federal Reserve will deal with a dollar that is far stronger than its global counterparts. According to Societe Generale’s Albert Edwards, the spark for this new round of “currency wars” – whereby countries manipulate foreign exchange to gain a global advantage — is the Japanese yen, which fell to its weakest against the greenback since 2002 on Tuesday.
The uber-bearish strategist predicts that “off the scale” quantitative easing (QE) by the Bank of Japan could see it continue to weaken and “set off another round in the global currency war.” He adds that this could have a detrimental effect on major economies around the world………………………………………..Full Article: Source

Euro takes a breather after sharp rally, awaits ECB’s Mario Draghi

Posted on 04 June 2015 by VRS  |  Email |Print

The euro took a breather on Wednesday a day after tracking soaring Bund yields to post its second biggest daily gain since Oct. 2011, with investors turning cautious in case the European Central Bank expressed any unease over its recent rise.
With the ECB committed to turning inflation back towards 2 percent, some traders expect the bank’s head Mario Draghi to use Wednesday’s news conference to push back against the euro’s strength and any talk that the bank’s asset purchase could be curtailed………………………………………..Full Article: Source

Currency-Trading Platform 360T Group Explores Sale

Posted on 04 June 2015 by VRS  |  Email |Print

Currency-trading platform 360T Group is exploring a sale of the company, in a deal that could fetch more than €600 million ($675 million), according to people familiar with the matter. The closely held company has attracted interest from a number of global-exchange and financial-data firms, the people said.
To be sure, it’s possible there will be no deal for the company soon. 360T’s platform consists of software that helps corporations, banks and other financial firms arrange currency and derivatives trades with each other. Its software also helps corporate clients hedge their currency risk. ……………………………………….Full Article: Source

Venezuela’s currency isn’t worth a penny

Posted on 04 June 2015 by VRS  |  Email |Print

Just a month ago, $1 was worth 279 bolivars. That was already pretty dismal for Venezuela. Now $1 equals 408 bolivars, according to the unofficial exchange rate, which most Venezuelans get when they try to trade currency.
Put another way, one bolivar equals $0.002 — less than a penny. The country’s currency has lost nearly half its value since the beginning of May, according to dolartoday.com, a website that tracks the unofficial exchange rate………………………………………..Full Article: Source

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

Posted on 03 June 2015 by VRS  |  Email |Print

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

Need to move towards plastic currency, says Indian Finance Minister

Posted on 03 June 2015 by VRS  |  Email |Print

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

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

Posted on 03 June 2015 by VRS  |  Email |Print

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

Can Anyone Match WisdomTree in Currency-Hedged ETFs?

Posted on 02 June 2015 by VRS  |  Email |Print

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

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

Posted on 02 June 2015 by VRS  |  Email |Print

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

How Chinese currency came in from the cold

Posted on 01 June 2015 by VRS  |  Email |Print

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

G7 welcomes renminbi to join IMF’s currency basket

Posted on 01 June 2015 by VRS  |  Email |Print

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

Stop Calling China a Currency Manipulator

Posted on 29 May 2015 by VRS  |  Email |Print

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

Citi Urges UK Government to Create its Own Digital Currency

Posted on 29 May 2015 by VRS  |  Email |Print

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

Currency hedging: Does it still work?

Posted on 28 May 2015 by VRS  |  Email |Print

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

Russia’s Currency Splash Has Economists Saying Ruble Rally Tamed

Posted on 28 May 2015 by VRS  |  Email |Print

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

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

Posted on 28 May 2015 by VRS  |  Email |Print

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

Dollar rise hits commodity prices

Posted on 27 May 2015 by VRS  |  Email |Print

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

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

Posted on 27 May 2015 by VRS  |  Email |Print

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

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

Posted on 27 May 2015 by VRS  |  Email |Print

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

Bernanke Says Currency Mismatch a Risk for China Policy Makers

Posted on 26 May 2015 by VRS  |  Email |Print

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

China and Chile sign currency swap agreement

Posted on 26 May 2015 by VRS  |  Email |Print

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

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

Posted on 25 May 2015 by VRS  |  Email |Print

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

Belarus Eases Currency Controls as Market Stabilizes

Posted on 25 May 2015 by VRS  |  Email |Print

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

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

Posted on 22 May 2015 by VRS  |  Email |Print

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

Where Are Oil Prices and the Ruble Going Next?

Posted on 21 May 2015 by VRS  |  Email |Print

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

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

Posted on 21 May 2015 by VRS  |  Email |Print

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

Compromise floated on currency rules in U.S. Senate

Posted on 21 May 2015 by VRS  |  Email |Print

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

Commodities Rally Hit by Stronger Dollar

Posted on 20 May 2015 by VRS  |  Email |Print

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

Ruble Rebound Prompts Currency Purchases by Finance Ministry

Posted on 20 May 2015 by VRS  |  Email |Print

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

Debate Over Currency Cheating Intensifies in Trade Talks

Posted on 20 May 2015 by VRS  |  Email |Print

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

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