Tag Archives: Currency Wars

Saudi Arabia Said to Ban Betting Against Its Currency

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“Authorities this week ordered banks to limit traders’ ability to bet against the riyal, whose peg to the dollar has been a bulwark of the kingdom’s economic and financial stability since its introduction three decades ago. Countries with currencies pegged to the dollar, such as Saudi Arabia and Hong Kong, are coming under increasing pressure from traders speculating that it’s become too expensive for policy makers to continue defending exchange rates as the U.S. currency soars. Bets for a devaluation of the riyal reached their highest in about two decades in January, even after the Saudi Arabian Monetary Agency said for a second time in four months it will stick with its currency peg.”

http://www.bloomberg.com/news/articles/2016-01-20/saudi-arabia-said-to-order-halt-of-local-riyal-forward-options

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World Bank tells Saudis to prop up currency amid global devaluation war

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“Saudi Arabia should use its massive foreign exchange reserves to defend the riyal, amid fears the world is descending into a new phase of global currency wars, the World Bank has said. The kingdom’s shaky currency peg with the dollar has come under record pressure this week as the price of oil has plummeted to near 12-year lows.  Central bank reserves have dropped from a peak of $735bn to around $635bn this year – a pace of spending which will exhaust the kingdom’s fiscal buffers within five years  The monarchy has vowed to stick by the exchange regime and is instead planning to strengthen its coffers through the unprecedented flotation of its state-owned oil giant, Aramco.”

http://www.telegraph.co.uk/finance/economics/12089324/Saudi-Arabia-China-riyal-dollar-currency-wars.html

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In Copenhagen, Apartment Prices Jump 60% After Rates Go Negative

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“Denmark’s biggest mortgage bank says there’s a ‘real risk’ Copenhagen is heading into a property bubble.  Property prices in Copenhagen have risen 40-60 percent since the middle of 2012, when the central bank first resorted to negative interest rates to defend the krone’s peg to the euro. The benchmark deposit rate has been minus 0.75 percent since February as Denmark’s currency war intensified, and most analysts surveyed by Bloomberg see negative rates lasting at least through 2017.  The Danish regulator this month warned Danske Bank against pursuing a growth strategy in Sweden as the housing market there shows signs of imbalances.”

http://www.bloomberg.com/news/articles/2015-10-21/60-house-price-surge-in-copenhagen-adds-to-bubble-drum-beat

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China Devaluation Is Blow to Cash-Strapped Argentina’s Reserves

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“China’s devaluation couldn’t come at a worse time for Argentina.  About a quarter of the country’s $33.7 billion of foreign reserves are now denominated in yuan, which suffered its biggest loss since 1994 on Tuesday.  The move is eroding the cash Argentina uses to pay its debt and comes as the nation is effectively shut out of overseas bond markets and struggling to defend its slumping peso at home. The country’s yuan holdings have ballooned since it signed an $11 billion currency-swap agreement with the People’s Bank of China in July.  In the unregulated market Argentines use to sidestep the government’s currency controls, the peso has sunk 12 percent in the past two months.”

http://www.bloomberg.com/news/articles/2015-08-13/china-devaluation-is-blow-to-cash-strapped-argentina-s-reserves

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The Yuan Drop Just Added $14 Billion to Asia Inc.’s Debt Burden

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“The record devaluation of the yuan has dragged down almost every currency in Asia. As they drop, the foreign debt bills of the region’s companies are rising.  Almost $1.6 trillion of bonds and loans denominated in dollars and euros across Asia outside Japan and China has just become $14 billion more expensive for companies that service the debt in their home currency, Bloomberg-compiled data show.  The cost to insure Malaysian government debt against nonpayment touched 171.5 basis points Wednesday, the highest since October 2011. Protection costs in Thailand, Indonesia, India and Vietnam also tested altitudes not seen in over a year.”

http://www.bloomberg.com/news/articles/2015-08-13/the-yuan-drop-just-added-14-billion-to-asia-inc-s-debt-burden

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China stuns financial markets by devaluing yuan for second day running

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“With the bank having said on Tuesday that that day’s action was a ‘one-off depreciation’, the rapid two-day drop in the value of the currency of about 4% dealt a blow to investors. They fear a prolonged currency war that could damage world trade should the US and Japan retaliate and drive down the value of the dollar and yen.  The prices of key industrial and construction metals – nickel, copper and aluminium – hit six-year lows.  The International Monetary Fund said China’s move to make the yuan more responsive to market forces appeared to be a welcome step and that Beijing should aim to achieve an effectively floating exchange rate within two to three years.”

http://www.theguardian.com/business/2015/aug/12/china-yuan-slips-again-after-devaluation

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China currency devaluation hits stocks; dollar gains on currency war fears

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“China’s 2 percent devaluation of the yuan on Tuesday pushed the U.S. dollar higher and hit Wall Street and other global equity markets as it raised fears of a new round of currency wars and fed worries about slowing Chinese economic growth.  U.S. stock indices dropped more than 1 percent and stocks also fell in Asia and Europe as investors contemplated the implications of a move designed to support China’s slowing economy and exports. Companies that sell to China were hit hard, with heavy equipment maker Caterpillar losing 3.13 percent and Germany’s Volkswagen dropping 4 percent. Energy and materials shares also tumbled on China demand concerns.”

 

http://www.reuters.com/article/2015/08/11/us-markets-global-idUSKCN0QG00F20150811

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Argentine small businesses turning to bitcoin

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“The prolonged use of capital controls in Argentina since 2011 has wreaked havoc for businesses operating in South America’s second-largest economy.  Under the leftist government of President Cristina Fernández, no immediate change is expected in Argentina’s complicated economic conditions, which have seen the use of bitcoin more than double over the past year, mainly among small businesses.  Recent raids on currency trading houses and new powers for the national spy agency to prevent speculative attacks pushed the peso’s black market value this week to its lowest levels since Argentina defaulted last year on its foreign debt for the second time this century.”

http://www.ft.com/intl/cms/s/0/b2a8cca4-2c11-11e5-8613-e7aedbb7bdb7.html#axzz3h7Y4tmqB

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Aussie, Kiwi And Loonie Under Commodity Currency Attack

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“Recent actions and rhetoric from Commonwealth Prime Ministers, and their respective policy makers, have put their commodity sensitive currencies under pressure.  In Australasia, the kiwi ($0.6592) and Aussie dollar ($0.7370) both linger within striking distance of their six-year lows. In North America, the loonie has fared no better, straddling its own six-year low, while under attack from last week’s Bank of Canada (BoC) rate cut to +0.5%. For now, dealers and investors are willing to trade as if they do not expect any short-term market reprieve for any of these commodity and interest sensitive currencies.”

http://www.investing.com/analysis/aussie,-kiwi-and-loonie-under-commodity-currency-attack-258998

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Croatian Swiss franc debtors demand central bank governor resign

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“Thousands of Croatians holding loans denominated in Swiss francs took to the streets of Zagreb on Saturday, demanding local banks to restructure the debts and the central bank governor to step down for failing to take action. Some 60,000 Croatians hold around 27 billion kuna (£2.5 billion) worth of Swiss franc-denominated loans, mainly taken out during the 2000s when many in central and eastern Europe were attracted to low interest rates on the Swiss currency. The franc surged in January when the Swiss central bank scrapped its peg to the euro, driving the loans’ costs sharply higher. The Croatian government fixed the franc rate against the kuna at 6.39 for one year to put a cap on the mounting debts.”

https://au.news.yahoo.com/world/a/27350119/swiss-franc-debtors-march-in-croatia-demand-cen-bank-governor-to-resign/

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