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Currency Wars: The Swiss Case

Posted on 31 March 2015 by VRS  |  Email |Print

This past January, the Swiss National Bank caused panic in the world of central banking when it announced that it would no longer hold the euro at a fixed exchange rate with the Swiss franc. On January 14, one euro was equivalent to 1.2 Swiss francs; after the statement was made the following day, the euro drastically dropped to just 0.85 to the franc.
Switzerland’s economy is highly reliant on its exports, meaning that a higher value of the franc over foreign currency means losses for the country and its industries. The removal of the peg did indeed cause huge losses for hedge fund holders across the world, and it also triggered the start of the collapse of the Swiss stock market………………………………………..Full Article: Source

Why Brazil’s currency is having a real tough time

Posted on 30 March 2015 by VRS  |  Email |Print

The Brazilian real moved sharply lower Friday after a gross domestic product report showed Brazil’s economy contracted in the fourth quarter compared with the same period a year earlier. The real traded at 3.23 to the U.S. dollar, compared with 3.19 Thursday.
The plight of the real, which has lost 18% of its value against the dollar since the beginning of the year, shows how important policy makers’ credibility can be to sustaining foreign investment and economic growth in an emerging market. A recent scandal involving kickbacks at its state-controlled energy company Petrobras, hasn’t helped restore investors’ faith in its economy………………………………………..Full Article: Source

Currency derivatives trading gains momentum

Posted on 30 March 2015 by VRS  |  Email |Print

Volumes in the currency derivatives space are up 80 per cent, compared with that at the start of the financial year. So far in March, the average daily volume for all exchanges combined stood at Rs 32,611 crore, compared with Rs 17,012 crore in April 2014. During this period, the open interest, too, has increased four-fold.
Market players attribute the lifting of trading curbs and stability in the currency as reasons for the gradual uptick in volumes seen in 2014-15. “We have seen a huge build-up of option positions. Regular trading interest in the currency derivatives has improved because of the expansion in the positional limits by the RBI (Reserve Bank of India). Volatility in the currency market has also been low,” said Kishore Narne, associate director and head (commodity and currency) at Motilal Oswal Commodity Broker………………………………………..Full Article: Source

Yuan and Gold: Old Enemies Should Finally Become Friends

Posted on 27 March 2015 by VRS  |  Email |Print

The Communist Party had good reason to avoid the use of gold when it set up China’s financial system, but having a reserve of the metal offers a range of benefits. We’ll never know if there really were 200 chests of gold on the steamer Taiping, as depicted in John Woo’s recent movie The Crossing, but we can verify that 1,317 cases of central bank records were sunk with the ship in 1949.
These documents, including the Draft Agreement on Gold, were the only legal basis the government of the Republic of China had to move the former central bank’s gold reserves to Taiwan so they could be used to “pre-pay military expenses.” With the situation on the mainland growing dire at the end of 1948, Chiang Kai-shek began planning to move all treasury assets to Taiwan, including gold reserves intended to back “jinyuanquan,” the paper money issued by the ROC government in 1948………………………………………..Full Article: Source

Global Currency Trading Principles Said to Be Ready for Release

Posted on 27 March 2015 by VRS  |  Email |Print

Central banks in the world’s biggest currency markets will publish on Monday principles of behavior and ethics for foreign-exchange trading, according to a person familiar with the document. The “Global Preamble: Codes of Best Market Practice and Shared Global Principles,” inspired by a Financial Stability Board proposal in September, was ratified after consultations in eight markets around the world, according to the person, who asked not to be identified because the talks are private.
The global move to improve standards of behavior is part of an overhaul after allegations traders colluded to rig rates in the $5.3 trillion-a-day currency market………………………………………..Full Article: Source

Russian currency rallies to strongest this year

Posted on 26 March 2015 by VRS  |  Email |Print

No more rouble trouble? Russia’s rouble is heading for its seventh consecutive day of robust gains versus the dollar, taking the currency to its strongest level this year, as oil prices have stabilised and a fragile truce in eastern Ukraine continues to hold.
Russia was facing a full-blown currency crisis last year, with the rouble sliding to new record lows almost every day – at one point collapsing to almost 80 per dollar, from about 33 at the start of 2014 – as oil prices dived and the west tightened sanctions against Moscow over its support for Ukrainian separatists………………………………………..Full Article: Source

Give China a Reserve Currency

Posted on 26 March 2015 by VRS  |  Email |Print

As former U.S. Secretary of State Colin Powell famously advised, China favors “overwhelming force” in its campaigns, military or otherwise. Most recently, in a direct challenge to the global economic architecture established by the U.S. and its allies after World War II, Beijing has pledged nearly $200 billion to various new lending institutions and funds — to bolster trade with Europe, establish a footprint in the Indian Ocean, build infrastructure across Asia and generally increase the mainland’s influence worldwide.
A new push to establish the renminbi as one of the world’s reserve currencies adds to this campaign. The move would confer prestige, take America down a peg and attract more investment………………………………………..Full Article: Source

The astounding rise of China’s currency: Don Pittis

Posted on 25 March 2015 by VRS  |  Email |Print

I sometimes wonder how the Communist revolutionary leader Mao Zedong, who warned against taking “the capitalist road,” would feel about his face on all those Chinese bills being traded around the world these days. As of this week, the renminbi is being traded in a major way in Canada as well, after Finance Minister Joe Oliver opened North America’s first Chinese currency trading hub Monday night in Toronto.
The currency has come a long way since the Chinese Communists began printing their own money in 1948 while the People’s Liberation Army was still battling nationalist forces for control of the country. Shortly after that, China officially named the currency the renminbi, using the characters for people and money. (As the BBC has explained, the currency is called the renminbi, while its unit is the yuan.)……………………………………….Full Article: Source

The Worst Performing Currencies Of 2015

Posted on 25 March 2015 by VRS  |  Email |Print

Speculators, hedgers and investors alike utilize currency markets. International corporations or those companies that import and export must also pay careful attention to fluctuations in foreign exchange (FOREX) rates. Typically, currency prices exhibit low volatility; however, as the first quarter of 2015 draws to a close, it is worthwhile to take a look at the worst performing currencies year to date.
As the U.S. economy recovers, the dollar has strengthened, making it one of the best performers over the last year. This is how other world currencies have fared vs. the dollar. The Russian Ruble was hit hard in 2014, losing nearly 40% of its value following economic sanctions by the West and low oil prices………………………………………..Full Article: Source

Why Currency Weakness Could Pave the Road To Growth

Posted on 24 March 2015 by VRS  |  Email |Print

Is it a coincidence that the U.S. economy’s post-crisis recovery came hand in hand with a weak dollar? Could the U.K.’s rebound have something to do with sterling’s 2007-08 crash? And is there any connection between the fact that both the British and American economies seem to be running out of steam just as their currencies strengthen? Or that the eurozone is simultaneously recovering?
Maybe a lot of the story of post-crisis economics boils down to currency moves. Between January 2009, when the U.S. was in the thick of recession, and the summer of 2011 when the recovery was finally getting under way, the dollar fell nearly 20% relative to other currencies based on how much trade other countries did with the U.S………………………………………..Full Article: Source

Why China Wants Yuan to Be the World’s 5th Reserve Currency

Posted on 24 March 2015 by VRS  |  Email |Print

China is a step closer to obtaining Special Drawing Rights status for its currency from the International Monetary Fund, a move that would see the yuan joining the greenback, euro, yen and British pound.
At a forum on Sunday, central bank Governor Zhou Xiaochuan swapped the topic of a panel discussion so he could pitch the renminbi’s readiness for reserve status to his co-speaker, IMF Managing Director Christine Lagarde. Premier Li Keqiang told Lagarde in a meeting Monday that China hopes to get the IMF’s seal of approval, according to the government. It may have worked………………………………………..Full Article: Source

Does Putin’s Proposed Eurasian Currency Union Make Sense?

Posted on 24 March 2015 by VRS  |  Email |Print

At a meeting in Kazakhstan last week, Russian President Vladimir Putin proposed a currency union for the members of the Eurasian Economic Union (EAEU). Russia, Kazakhstan, Belarus, and Armenia are the current members, and Kyrgyzstan is scheduled to join later this spring. Does a common currency for the EAEU make sense? Not in economic terms, but perhaps there is a political subtext that makes the proposal more understandable.
A currency union is simply a group of countries that share a common currency. The Eurozone (EZ) is the best-known example. The much smaller Common Monetary Area, based on the South African Rand, is another. The 50 states of the United States are sometimes viewed as a currency union for economic purposes, even though the members are not sovereign countries………………………………………..Full Article: Source

Canada Hub Aims to Boost Deals in China Currency

Posted on 23 March 2015 by VRS  |  Email |Print

Canada’s launch of a trading hub Monday will make it easier for companies in the Western Hemisphere to do business in Chinese currency, part of a larger effort to boost trade with the world’s second-largest economy and give its money an expanded role on the world stage.
China’s central bank is backing the new Renminbi Trading Hub for the Americas, which will allow firms in numerous countries to conduct their renminbi transactions through Canadian banks. The system is expected to save companies time and fees while creating new revenue for the Canadian financial institutions that act as hub gatekeepers. Industrial and Commercial Bank of China’s Canadian subsidiary will clear the transactions………………………………………..Full Article: Source

Currency hedging takes on new importance for global stock funds

Posted on 23 March 2015 by VRS  |  Email |Print

As the dollar surged in the last 12 months, David Marcus, head of the Evermore Global Value fund, steadily increased his stake in Europe. He now has 60 percent of his portfolio invested in companies in the euro zone, the largest stake among any global fund tracked by Lipper.
The gains in those stocks wouldn’t matter if the fund wasn’t actively hedging against euro weakness, which it is, helping the fund rise 8.8 percent so far in 2015, putting it among the top-performing global stock funds this year. “We’re stockpickers, and by hedging currencies we can be pure stockpickers without the currency risk,” said Marcus………………………………………..Full Article: Source

Vladimir Putin calls for ‘Eurasia’ currency union

Posted on 23 March 2015 by VRS  |  Email |Print

Has the time come for Russia to dump the rouble and create it’s vision for their own Eastern European economic and monetary block? Back in May, LeapRate reported the on formal signing of partnership of the new ‘Eurasian Union’, which includes Russia, Belarus and Kazakhstan. The partnership, which has been effective from the start of the year, will implement tariff and non-tariff regulations.
The report back in may stated that the newly formed ‘Eurasian Union’ will “gradually align” their currency and monetary policies. Well, 3 months into 2015, the Russian leader is looking to speed things along on the monetary front, especially as the rouble has been battered within the last year………………………………………..Full Article: Source

Four dangerous currency exchange myths

Posted on 23 March 2015 by VRS  |  Email |Print

Being apathetic about currency exchanges rates can be very damaging for your business. Let’s look at some of the dangerous myths that people cling to, to justify keeping their head in the sand.1. What goes up must come down: Or the reverse: that a sinking currency must recover eventually. History tells us that movements in many markets tend to have cycles, but there’s no way of knowing when the tide may turn your way again.
2. Market consensus is pretty reliable: Market consensus a year ago was for AUD/USD to be around 85c by year end. It actually finished 2014 nearer 80c. There were also several predictions for the Aussie to fall below 70c by mid-2014. Again they were wrong: it’s still well above that level now, as we approach Q2 2015………………………………………..Full Article: Source

Sen. Grassley: Time to stand up to China on currency

Posted on 20 March 2015 by VRS  |  Email |Print

Both Democrats and Republicans have exercised too much caution in dealing with China on the issue of currency manipulation, Sen. Chuck Grassley, R-Iowa, said on Thursday. “We’ve never wanted to charge them with manipulation and I think our caution has been to the disadvantage of the American consumer, to the disadvantage of our producers in this country,” he said.
Chinese officials have leaned on the excuse that American concerns about currency manipulation amount to interference in China’s domestic policy, said Grassley, who sits on the Senate’s Committee on Finance and the Joint Committee on Taxation………………………………………..Full Article: Source

Fed Inspired Currency Volatility Seen Weighing on Liquidity

Posted on 20 March 2015 by VRS  |  Email |Print

Foreign-exchange traders better get used to wider swings in exchange rates and less liquidity as the Federal Reserve keeps markets guessing while moving closer to raising interest rates.
Volatility for the dollar jumped to the highest level in 14 years Wednesday after the U.S. central bank indicated the pace of rate increases will be slower than it previously predicted while not ruling out tightening as soon as June. Credit Suisse Group AG said in a note Thursday that “traders described liquidity as being appallingly thin.”……………………………………….Full Article: Source

In boon for bitcoin, UK to regulate digital currency exchanges

Posted on 19 March 2015 by VRS  |  Email |Print

Britain took a significant step towards becoming a global bitcoin hub on Wednesday as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.
Already the center of the $5-trillion-a-day market for traditional currencies, the UK is fast emerging as a center for digital currencies too, cementing its place as European’s financial technology, or “FinTech”, capital………………………………………..Full Article: Source

Sweden’s Krona Tumbles After Riksbank’s ‘Currency War’ Rate Cut

Posted on 19 March 2015 by VRS  |  Email |Print

Sweden’s krona weakened the most in 16 months against the euro after the nation’s central bank cut interest rates and expanded its government-bond purchase plan outside of its schedule for policy decisions.
The Swedish currency depreciated to a six-year low against the dollar as the Riksbank took further steps to combat low consumer price growth, after it exited deflation in February for the first time in seven months. Central banks from the euro area to Denmark are easing monetary policy to revive their economies and prevent significant currency appreciation using measures that include buying public debt and imposing negative interest rates………………………………………..Full Article: Source

Why currency-hedged ETFs are hot

Posted on 18 March 2015 by VRS  |  Email |Print

My colleague Michelle Caruso-Cabrera made some very good points on air today concerning investing overseas: because of enormous moves in currency, buying stocks overseas—including ETFs—can be perilous.
As an example, she notes the German DAX index is up 22 percent this year, but the iShares Germany ETF, which measures the performance of the German equity market, is up only 8 percent in U.S. dollars, thanks to the tremendous drop in the euro (down almost 13 percent against the dollar)………………………………………..Full Article: Source

Commodity Dollars Near Lows Amid Bets Fed Patience Growing Thin

Posted on 18 March 2015 by VRS  |  Email |Print

The currencies of commodity-exporting nations including Australia and New Zealand traded near the lowest in at least four years as traders braced for a Federal Reserve statement that may indicate it’s ready to raise interest rates.
The Australian dollar was less than one U.S. cent away from its lowest since May 2009, while the New Zealand currency was weighed down by a disappointing dairy auction. The U.S. currency dropped for a second day against the euro on Tuesday and slid from the highest since at least 2004 against a basket of major peers after housing starts lagged behind forecasts………………………………………..Full Article: Source

Brazil’s Real Gains as Weak U.S. Data Damp Fed Increase Outlook

Posted on 18 March 2015 by VRS  |  Email |Print

Brazil’s real climbed from a 12-year low as speculation the Federal Reserve will signal it’s in no hurry to raise borrowing costs buoyed emerging-market assets.
The real appreciated 0.2 percent to 3.2397 per dollar at the end of trade in Sao Paulo after dropping to the weakest intraday level since April 2003. Three-month implied volatility on options for the real, reflecting projected shifts in the exchange rate, was the highest among 16 major currencies………………………………………..Full Article: Source

U.S. Dollar Takes Gold ETFs For A Ride

Posted on 17 March 2015 by VRS  |  Email |Print

Gold and bullion-related exchange traded funds have exhibited an inverse relationship against the U.S. dollar, but the moves this time around may not be as severe. Over the past year, the SPDR Gold Shares (NYSEArca: GLD) has declined 16.1%, whereas the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) jumped 24.2%.
Gold has shown a history of moving inversely with the USD. In 1971, U.S. President Richard Nixon ended the U.S. dollar to gold conversion, sending the dollar into a free fall and lifting gold prices to a peak of $850 per ounce, reports Henry Sanderson for the Financial Times………………………………………..Full Article: Source

Goodbye dollar? Here’s the currency of the future

Posted on 17 March 2015 by VRS  |  Email |Print

How will you pay for groceries or gasoline in the future? According to Kabir Sehgal, author of the new book “Coined,” it might not be the old familiar greenback. As technology advances, so do currencies and payment systems.
“Look at Amazon (AMZN) points, Starbucks (SBUX) points. These are effectively the new currencies,” he says. “There are more frequent flyer miles in circulation than dollars, so it’s one of the biggest currencies in the world.” Sehgal believes that the future of money may involve the linking of corporate currencies………………………………………..Full Article: Source

Currency Volatility Damage to Earnings Seen Worsening in Quarter

Posted on 17 March 2015 by VRS  |  Email |Print

After doubling in the fourth quarter, the negative impact of swings in foreign-exchange rates on corporate earnings is likely to worsen in the three months ending March 31. That’s the outlook of FiREapps, a Scottsdale, Arizona-based company that advises businesses on reducing the impact of currency volatility.
For the 846 North American companies monitored by FiREapps during the final three months of 2014, the average negative currency impact was 6 cents per share, more than double the average of 2 to 3 cents for the prior two years………………………………………..Full Article: Source

Commodities fall to 12-year low as dollar rises amid surplus

Posted on 16 March 2015 by VRS  |  Email |Print

Slumping energy prices led commodities to a 12-year low as the dollar’s best rally since 2008 reduced the investment appeal of raw materials amid surpluses of everything from oil to sugar. The Bloomberg Commodity Index fell 1.4 per cent to 97.5777, the lowest level since August 2002, dragged down by crude oil and raw sugar.
The Bloomberg Dollar Spot Index, tracking the greenback against 10 currencies, is set to climb the most since 2008 this quarter and reached the highest level in data going back to the end of 2004. A stronger dollar tends to deter investment in raw materials. Commodities are tumbling as economies expand in the US and cool in other nations, driving the dollar higher. The Federal Reserve will hold a policy meeting this coming week as strength in the US labour market fuels speculation that the central bank will lay the groundwork for higher borrowing costs………………………………………..Full Article: Source

No, We’re Not in a Currency War

Posted on 16 March 2015 by VRS  |  Email |Print

Anyone paying attention to the financial media could easily get the impression that the world is hellbent on stealing the U.S. economic recovery. Central banks from Frankfurt to Beijing, the story goes, are pushing down their currencies’ exchange rates against the dollar — and against one another — in a craven effort to make their exports cheaper.
Lest this “currency war” meme lead politicians to do anything inadvisable, let’s be clear: It’s a load of baloney. True, there has been a lot of action lately in foreign-exchange markets. Even as the U.S. Federal Reserve has moved toward raising interest rates, policy makers in other major economies — Europe, Japan and China — have been pushing rates down, sometimes into negative territory………………………………………..Full Article: Source

Currency derivatives’ turnover falls over 33% in February

Posted on 16 March 2015 by VRS  |  Email |Print

Currency derivatives turnover at the nation’s three bourses fell by more than 33 per cent to Rs 4.80 lakh crore during February over the preceding month. The three bourses - NSE, BSE and MCX-SX - together had recorded a currency derivative turnover of Rs 7.21 lakh crore in January 2015, latest data showed.
Currency derivative volumes on the three stock exchanges also plunged by nearly 33.45 per cent to 7.63 crore in February as against 11.46 crore in January, 2015. Currency derivative contracts allow investors to take position on change in the foreign exchange rates between pairs of two currencies, such as rupee and dollar………………………………………..Full Article: Source

Commodities rallying as dollar takes a breather

Posted on 13 March 2015 by VRS  |  Email |Print

A pullback for the dollar and some bullish China data are helping all things commodity. In a broadly upbeat base metals sector, the price of copper is surging 2.7 per cent to $5,882 a tonne, while nickel and zinc are gaining 1.9 per cent and 1.1 per cent, respectively.
All these raw materials are quoted in greenbacks, so a pause in the buck’s rally - the dollar index is dipping 0.7 per cent from its 12-year high - is delivering a traditional rally for the sector. They are also getting a boost from hopes of more demand from China, following news that Chinese banks’ new loans in February hit Rmb1tn, roughly $163bn, far more than economists had expected………………………………………..Full Article: Source

Why Currency Hedged ETFs Are Just Getting Started

Posted on 13 March 2015 by VRS  |  Email |Print

Investors in traditional international funds are waking up to the realization that currencies play a vital role in generating returns. The majority of funds that track both developed and emerging markets use a U.S.-dollar denominated structure that faces an uphill battle during periods of prolonged dollar strength.
Dodd Kittsley, head of ETF strategy at Deutsche Asset & Wealth Management, recently wrote a new market outlook report that underscored the headwind a rising U.S. dollar creates for these assets. He pointed out that in 2014 the MSCI EAFE Index returned 5.9 percent in local currency terms, but –4.9 percent in U.S. dollar terms, a difference of 10.8 percentage points………………………………………..Full Article: Source

Are currency wars looming in Asia?

Posted on 13 March 2015 by VRS  |  Email |Print

Does the rising wave of surprise interest-rate cuts in Asia portend a currency war? Central bankers won’t let the term leave their lips. Bank of Korea governor Lee Ju-yeol yesterday, in announcing an interest-rate cut to a record low 1.75 per cent, was studious in denying such a thing existed.
Yet both South Korea and Thailand, which cut rates on Wednesday, have reason to worry about the strengthening of their currencies. The won has lost value against a resurgent US dollar, but has strengthened 10 per cent against the euro since the start of 2015. It is also up 10 per cent against the Japanese yen over the past year………………………………………..Full Article: Source

China looks to add yuan to IMF currency basket

Posted on 13 March 2015 by VRS  |  Email |Print

China is in talks with the International Monetary Fund to include the yuan in the institution’s basket of reserve currencies, according to a central bank official. “We are evaluating this and are actively in talks with the fund,” People’s Bank of China Deputy Governor Yi Gang said at a press conference in Beijing Thursday.
“We hope it can fully consider the progress of yuan internationalization, allowing the yuan to be part of the SDR basket in the foreseeable future.” China is promoting the global usage of its currency as it seeks to liberalize domestic interest rates and open up capital markets. The yuan overtook Canada’s dollar to rank fifth for use in international payments in December, after passing the euro as the second-most used in trade finance in 2013………………………………………..Full Article: Source

IBM looking at adopting bitcoin technology for major currencies

Posted on 13 March 2015 by VRS  |  Email |Print

International Business Machines Corp is considering adopting the underlying technology behind bitcoin, known as the “blockchain,” to create a digital cash and payment system for major currencies, according to a person familiar with the matter.
The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, the person said. The transactions would be in an open ledger of a specific country’s currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorization to discuss the project in public………………………………………..Full Article: Source

Why the Dollar Rally Is Hurting Your Commodities

Posted on 12 March 2015 by VRS  |  Email |Print

During the past few trading days, it has become increasingly clear that the impending market volatility that I’ve been warning about lately has arrived. Here’s the long and short of what is happening with the market right now…
Any time the dollar rallies — it had a dramatic rally on Friday and another dramatic rally yesterday — the market pulls back because commodities (oil, gold, aluminum, etc.) are priced in U.S. dollars. So, when the dollar rallies, commodity prices — especially oil prices — fall. I recommend a handful of commodities-related stocks, and we’re seeing the strong dollar weigh on these stocks in the near-term………………………………………..Full Article: Source

Euro-dollar parity just a ‘matter of time’ as single currency plunges to 12-year low

Posted on 12 March 2015 by VRS  |  Email |Print

Single currency falls to 12 year low against the dollar, as analysts say parity is now inevitable. Euro-dollar parity is only a “matter of time”, analysts said on Wednesday, after the single currency fell to a fresh 12-year low against the greenback.
The euro dropped as low as $1.0560 against the dollar on Wednesday morning after Mario Draghi, the president of the European Central Bank (ECB), said policymakers had the will and the means to bring inflation back to the bank’s target of just below 2pc………………………………………..Full Article: Source

Currencies Gyrate, but There’s No War

Posted on 12 March 2015 by VRS  |  Email |Print

It’s not a currency war if everyone wins. The euro has fallen to near a 12-year low against the dollar this week since the European Central Bank began its long-awaited bond-buying program. The cheap euro is great for Europe: It bolsters exports and thus growth, and raises the price of imports, thereby warding off deflation.
Feelings are more mixed in the U.S. The greenback’s strength against the euro and a host of other currencies will trim U.S. growth, squeeze exports and make it harder for the Federal Reserve to get inflation back up to its 2% target………………………………………..Full Article: Source

China’s Plan for Winning the Currency Wars

Posted on 12 March 2015 by VRS  |  Email |Print

The currency wars are still rumbling on. Today, Thailand became at least the 21st country to cut interest rates so far this year, as everyone tries to make their currency cheaper than everyone else’s. The Federal Reserve still seems on track to raise rates in June, turbocharging the dollar. But there’s more than one way to win a battle.
You can inflict increasing damage on your opponent, which is what most of the world is doing to the U.S. Or you can gain territory — which is what China is doing as its currency steals more and more of the global market………………………………………..Full Article: Source

London copper turns lower as dollar firms up

Posted on 11 March 2015 by VRS  |  Email |Print

London copper sagged on Tuesday as a stronger dollar clipped the gains from short-covering in the previous session, while traders waited for signs of demand from China, the world’s top copper user, after last month’s long holiday.
The dollar scaled a near 12-year peak against the euro on Tuesday, as the underlying theme of monetary policy divergence held sway, making commodities more expensive for the holders of other currencies and exacerbating price pressure after soft trade data this week cast a shadow over metals demand………………………………………..Full Article: Source

Optimists see end for Brazil currency slide

Posted on 11 March 2015 by VRS  |  Email |Print

When Brazil’s central bank met in late January to consider increasing interest rates, it predicted the currency, the real, would hover at R$2.65 to the dollar for the next two years. On Monday, the currency closed at about R$3.12 against the dollar, near an 11-year low after weakening 15 per cent so far this year.
The once mighty real — only a few years ago Brazil was fighting a “currency war” to keep it from appreciating against the dollar — has been hit by a scandal at state-owned oil company Petrobras and a deep slowdown in Latin America’s largest economy………………………………………..Full Article: Source

Dollar rally has long way to go

Posted on 11 March 2015 by VRS  |  Email |Print

The dollar is flexing its muscles on the prospect of higher U.S. interest rates, and it may be only half way through a dramatic move that is jarring global currency, bond, commodity and stock markets.
The dollar index touched a new 12-year high Tuesday, and is now up 3.3 percent for the month of March. The yen slid against the greenback and the euro waffled, edging closer to parity at $1.07 against the dollar. Emerging market currencies also sold off, with the Mexican peso plumbing a new all-time low………………………………………..Full Article: Source

Brazilian real falls to 11-year low over risk to austerity plan

Posted on 10 March 2015 by VRS  |  Email |Print

Brazil’s real plunged to a near 11-year low on opening in São Paulo amid concerns that rising political risk could threaten President Dilma Rousseff’s fiscal austerity plan. The currency’s latest drop followed a tumultuous weekend in Brazilian politics in which a speech by President Dilma Rousseff seeking to convince her countrymen of the need for fiscal austerity provoked protests in major cities.
Meanwhile prosecutors launched investigations into a group of 54 senior political figures over a scandal at state oil producer Petrobras. “The hostility in Congress is getting worse by the day and it casts doubt on the planned fiscal adjustments,” said Silvio Campos Neto at Tendências Consultoria, a São Paulo-based consultancy………………………………………..Full Article: Source

Chinese currency manipulation not a problem

Posted on 10 March 2015 by VRS  |  Email |Print

America’s two political parties rarely agree, but one thing that unites them is their anger about ‘currency manipulation’, especially by China. Perhaps spurred by the recent appreciation of the dollar and the first signs that it is eroding net exports, congressional Democrats and Republicans are once again considering legislation to counter what they view as unfair currency undervaluation.
The proposed measures include countervailing duties against imports from offending countries, even though this would conflict with international trade rules. But this approach is misguided. Even if one accepts that it is possible to identify currency manipulation, China no longer qualifies………………………………………..Full Article: Source

Why It Matters If the Dollar Is the Reserve Currency

Posted on 09 March 2015 by VRS  |  Email |Print

We refer to the dollar as a “reserve currency” when referring to its use by other countries when settling their international trade accounts. For example, if Canada buys goods from China, China may prefer to be paid in US dollars rather than Canadian dollars. The US dollar is the more “marketable” money internationally, meaning that most countries will accept it in payment, so China can use its dollars to buy goods from other countries, not solely the US.
Such might not be the case with the Canadian dollar, and China would have to hold its Canadian dollars until it found something to buy from Canada. Multiply this scenario by all the countries of the world who print their own money and one can see that without a currency accepted widely in the world, international trade would slow down and become more expensive. In some ways, its effect would be similar to that of erecting trade barriers, such as the infamous Smoot-Hawley Tariff of 1930 that contributed to the Great Depression………………………………………..Full Article: Source

Venezuela’s Currency Circus

Posted on 09 March 2015 by VRS  |  Email |Print

In a faraway land, an eccentric king nailed an edict to the door of his palace that said: “Henceforth, $20 bills will be sold here for $1.” Within minutes, his subjects were clamoring for those cut-rate twenties. So the king posted a second edict: “Each $20 bill shall be used only to buy things abroad.” Then a third: “Whatever you buy abroad with your $20 you must sell in our kingdom for $2.”
“This will make me beloved!” he thought. “Foreign goods will be cheap for all.” But it didn’t work out that way. Soon, the lines for $20 bills were matched by lines at every store that sold foreign goods………………………………………..Full Article: Source

Inside the Currency Wars

Posted on 09 March 2015 by VRS  |  Email |Print

Almost all the world’s currencies are dropping against the U.S. dollar. The decline is being driven mostly by governments and central banks bent on cheapening their currencies to gain an advantage in global trade and boost their weak economies.
Since December, 22 major foreign currencies have declined an average of 4.5 percent against the greenback. A cheaper currency makes exports less expensive and thus more attractive to foreign buyers. A devalued currency also drives up import prices, which discourage domestic consumers from purchasing foreign goods………………………………………..Full Article: Source

Why this top-performing currency may falter

Posted on 06 March 2015 by VRS  |  Email |Print

Thailand’s baht has surprised markets by becoming one of the world’s best performing currencies over the past year despite the country’s political turmoil, but that could soon change, analysts said.
“The strength of the baht has been puzzling coming as it has against a backdrop of political uncertainty, cyclical underperformance, looser monetary policy, the promise of easier fiscal policy and a strong dollar,” Jonathan Sequeira, an analyst at Goldman Sachs, said in a note Tuesday………………………………………..Full Article: Source

Currency is key to Venezuela’s great escape

Posted on 06 March 2015 by VRS  |  Email |Print

Venezuela is teetering on the brink of a crisis that only uncharacteristically radical reform can remedy. There has been no shortage of oil price talk in recent months – and no shortage of oil for that matter. Every week it seems a new low cost record is broken, and whereas a barrel of Brent last year clocked in at over $100, you can take one home today for approximately $50.
Consumers meanwhile, are glad of the pennies saved at the pump and some countries have responded to this new low cost environment by recouping some of the money lost to subsidies in years passed. However, for the members of OPEC, whose finances rely on black gold, the storm clouds show no signs of parting, and pressure is mounting on recession-hit Venezuela to rethink its reliance on oil and its restrictive currency controls………………………………………..Full Article: Source

Swiss government has not asked for new currency cap-spokesman

Posted on 05 March 2015 by VRS  |  Email |Print

The Swiss government has not asked its central bank to introduce a new cap on the value of the Swiss franc, a spokesman for the government said on Wednesday, after a Swiss newspaper reported that two ministers had suggested such a move.
Switzerland’s central bank stunned financial markets on Jan. 15 when it ended its cap on the value of the franc against the euro, stoking fears for the export-reliant Swiss economy. The Swiss National Bank (SNB) is independent of the government in its monetary policy decision making………………………………………..Full Article: Source

US Bank Regulator: Virtual Currencies Could Be ‘Revolutionary’

Posted on 05 March 2015 by VRS  |  Email |Print

The head of an independent US agency within the US Treasury that supervises national banks has issued new statements on virtual currencies and their “potentially revolutionary” impact on banking.
Speaking before the Institute of International Bankers this week, the head of the Office of the Comptroller of the Currency (OCC) Thomas J Curry discussed virtual currency as part of a speech aimed at addressing the Bank Secrecy Act (BSA) and its ability to adapt to new innovations………………………………………..Full Article: Source

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