Foreign Exchange – Spectacles 17E 18E http://spectacles17e18e.org/ Wed, 29 Jun 2022 19:30:47 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://spectacles17e18e.org/wp-content/uploads/2021/07/icon-4-150x150.png Foreign Exchange – Spectacles 17E 18E http://spectacles17e18e.org/ 32 32 SBP declares currency trading on the platform illegal https://spectacles17e18e.org/sbp-declares-currency-trading-on-the-platform-illegal/ Wed, 29 Jun 2022 19:25:45 +0000 https://spectacles17e18e.org/sbp-declares-currency-trading-on-the-platform-illegal/ Illegal foreign exchange transactions Currency trading platforms such as OctaFX, Easy Forex, etc. encourage clients to trade on their platforms. Many citizens invest and trade on these platforms. According to the new SBP regulatory guideline, sending money abroad for foreign exchange transactions is both dangerous and illegal. Clients are attracted to trade on multiple currency […]]]>

Illegal foreign exchange transactions

  • Currency trading platforms such as OctaFX, Easy Forex, etc. encourage clients to trade on their platforms.
  • Many citizens invest and trade on these platforms.
  • According to the new SBP regulatory guideline, sending money abroad for foreign exchange transactions is both dangerous and illegal.

Clients are attracted to trade on multiple currency trading platforms; like OctaFX, Easy Forex, etc. They have a large advertising presence on popular social media sites like Facebook, Youtube, etc. On these platforms, many people trade and invest. Some investors took advantage of this; while others lost money. It has since been discovered that trading on these platforms is prohibited. Use apps, websites or platforms like OctaFX to engage in currency trading; leveraged trading or contract for difference (CFD) trading is dangerous and illegal; according to a new SBP regulatory regulation.

Read also

SBP denies rumors of freezing foreign currency accounts

KARACHI: The State Bank of Pakistan (SBP) said on Monday that the…

Additionally, they leverage social media marketing to pitch their products; Pakistani citizens and attract them; to buy their products. These purchases made by Pakistani citizens; are against section 4(1) of the FERA. Additionally, it has been found that Authorized Resellers (AD); make payments on these offshore trading platforms; through their payment gateways.

The SBP statement goes like this:

“The attention of Authorized Dealers (AD) is drawn to Section 4(1) of the Regulation of Foreign Exchange Act 1947 (FERA); which, inter alia, provides, ‘Except with general or special authorization prior to the State Bank, no person other than an authorized reseller may be in Pakistan; and no person residing in Pakistan other than an authorized reseller shall leave Pakistan; buy or borrow, sell, lend or exchange with anyone who is not an authorized dealer; any foreign currency. Similarly, the attention of DAs is also drawn to Section 5 ((1(a)) of the FERA which provides; “Except to the extent that as may be provided in and pursuant to any general or special exemption from the provisions of this subsection; which may be conditionally or unconditionally granted by the State Bank, no person in Pakistan or resident in Pakistan shall: (a) make a payment to or for the credit of u no one residing outside Pakistan. »

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The first global credit crisis https://spectacles17e18e.org/the-first-global-credit-crisis/ Mon, 27 Jun 2022 11:04:08 +0000 https://spectacles17e18e.org/the-first-global-credit-crisis/ Stein Berre, Paul Kosmetatos and Asani Sarkar June 2022 marks the 250e anniversary of the outbreak of the credit crisis of 1772-3. Although little known today, it was arguably the first “modern” global financial crisis in terms of the role played by the private sector. credit and financial products played into it, in the financial […]]]>

June 2022 marks the 250e anniversary of the outbreak of the credit crisis of 1772-3. Although little known today, it was arguably the first “modern” global financial crisis in terms of the role played by the private sector. credit and financial products played into it, in the financial contagion pathways that spread the initial shock and in the way authorities intervened to stabilize markets. In this article, we describe these developments and note the parallels with modern financial crises.

The evolution of the credit crisis

The crisis of 1772-3 was global in scope, with failures spread across Britain and the Netherlands, the other major European financial centers, and as far afield as St. Petersburg and the West Indian and North American colonies (as mentioned in a previous article). Economy of Liberty Street Publish). Over the course of a year, it disrupted credit markets, negatively affecting banks and non-bank borrowers.

There were two waves of failures. Triggered by the flight of the Scottish banker and speculator Alexander Fordyce, panic broke out on June 9, 1772, in London, with the experimentation Bank of Ayr in Scotland a significant casualty soon after. Another series of failures hit Amsterdam in the winter of 1772-3; the most notable of these was the old Bank of Clifford, considered by contemporaries to be the second most important bank in Europe.

Since the role of rapidly evolving private credit markets was crucial in precipitating and spreading the crisis, we begin with an overview of the private credit instruments prevalent at the time.

Bills of exchange helped transmit contagion

The bill of exchange was the main tool of credit fueling trade at that time: a promise to pay money (usually foreign currency) in a defined place and at a certain time. It was basically an IOU that a merchant or bank could “accept” or ask someone with stronger credit to accept (guarantee) on their behalf. Depending on the distance the invoice or related shipments might have to travel, the invoice would typically have a due date of up to one year, although three to six months is more common.

Although originally created to support short-term trade, a note could (and was) endorsed by third parties in payment of debts before its maturity, effectively serving as a substitute for paper money. All parties (including endorsers) signing an instrument were jointly and severally liable for the debt, thereby diversifying credit risk in normal times. During times of distress, however, the bill’s credit liability features served as a means of financial contagion since all undersigned parties were at equal risk of being called for the entire debt.

The bill of exchange was also increasingly used in long-term finance by “rolling” an expiring bill with a corresponding bill on the same date, in a process known as pivoting. This helped traders secure their working capital, but also allowed speculators to fund purchases of long-term, high-risk assets, such as commodities or stocks. The risk of “rollover” inherent in this process is similar to that underlying the global financial crisis. crisis from 2007-9.

Mortgage

Mortgage innovations in the mid-eighteenth century are notable for their contribution to the financial instability on the eve of 1772 and the failures of that year. Mortgages themselves became more speculative as they included riskier loans, such as those secured by West Indian plantations run on behalf of absentee landlords. Because the loans were bundled and sold as mortgage-backed securities (MBS), they spread the underlying risk widely among investors.

MBS (negotiations in Dutch) were published on a large scale in the Netherlands in the 1760s. They were sold to wealthy private investors, often in increments of 1,000 guilders, a sum of about six to eight times the annual income of a particular citizen. The plantation sector in the Caribbean fueled the boom, with mortgages on Dutch and Danish plantations in the West Indies being used as collateral for more than 40 million guilders of new loans (about 22% of Holland’s GDP) in the years 1766. -72 only. By the end of the decade, the volume of new loans exceeded productive investment opportunities.

Margin loan

Stock market speculation, then as now, relied heavily on margin lending. Notaries and other intermediaries had long used the pledge of securities as the basis for short-term loans. In the Amsterdam market, these loans were usually for six months, with an option to renew if both parties agreed. A haircut on the pledged securities ensured that in the event of borrower default, the value of the collateral would be more than sufficient to cover the losses.

These investments were often cross-border, with the Dutch acting as the main financiers of speculation in British stocks and debt securities. Increasingly, sophisticated investors were lending through arrangements similar to those used today by prime brokers when lending to hedge funds. These lenders ensured that they could re-margin their loans in response to market movements and thus were able to avoid losseseven as a credit crunch gripped the market.

However, not all lenders have demonstrated this level of sophistication. Some lent against illiquid securities, such as negotiations. Others have failed to obtain legal control of warranties, and disputes over who was entitled to what share of funds recovered from creditors continued for many years thereafter.

Clean up the mess

To quell the panic and ensure the trading economy did not collapse, authorities used tools familiar to modern readers: secured loan facilities and lender-of-last-resort powers.

In Amsterdam, the city authorities have set up a secured loan facility open to anyone with eligible collateral to pledge. Loans backed by various warehoused goods (Beleningskamer loans), and provided at standardized advance rates, replaced some of the lending capacity that had been lost. While these loans were relatively small in size, the very existence of the facility halted the downward spiral of forced commodity liquidations and helped bring private lenders back into the market. These loans, combined with the arrival of shipments of precious metals called from other European financial centers, ensured that the markets resumed their normal functions by mid-1773, although investors absorbed large losses.

The Bank of England provided last resort loan from 1772 (although the term itself was not coined until three decades after the Depression). The Bank provided liquidity by increasing the volume of its discounts. Due to usury laws, the Bank was forced to ration these loans instead of raising its discount rate as Bagehot would suggest later. But the Bank has not been shy about deploying additional means of containment, such as supporting the biggest note acceptors in London with targeted short-term loans, through which they could in turn support their customers.

Last words

As intense as the twin panics of 1772-1773 were, authorities managed to stabilize markets and restore confidence in the economy. These events gave a greater role to the institutional infrastructure of finance, concentrated around central banks and other establishments, and created a set of financial stabilization techniques that are still used today. The availability of these new tools was fortuitous, as Europe entered the period of the most profound changes in economic growth and capital investment in human history.

Stein Berre is director of the surveillance group at the Federal Reserve Bank of New York.

Paul Kosmetatos is a Lecturer in International Economic History at the University of Edinburgh.

Asani Sarkar is Financial Research Advisor for Nonbank Financial Institutions Studies in the Research and Statistics Group of the Federal Reserve Bank of New York.


Disclaimer
The opinions expressed in this article are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

]]> R&D on FX software market including top key players eMoneyexchangesoft, Conotoxia, Banking Circle Real-time FX – Designer Women https://spectacles17e18e.org/rd-on-fx-software-market-including-top-key-players-emoneyexchangesoft-conotoxia-banking-circle-real-time-fx-designer-women/ Sat, 25 Jun 2022 10:17:32 +0000 https://spectacles17e18e.org/rd-on-fx-software-market-including-top-key-players-emoneyexchangesoft-conotoxia-banking-circle-real-time-fx-designer-women/ Exchange software Market is expected to grow at a significant rate, reports JC Market Research. His latest research report, titled [Global Foreign Exchange Software Market Insights, Forecast to 2030], offers a unique perspective on the global market. Analysts believe that changing consumption patterns are expected to have a big influence on the overall market. For a brief […]]]>

Exchange software Market is expected to grow at a significant rate, reports JC Market Research. His latest research report, titled [Global Foreign Exchange Software Market Insights, Forecast to 2030], offers a unique perspective on the global market. Analysts believe that changing consumption patterns are expected to have a big influence on the overall market. For a brief overview of the world Exchange software market, the research report provides an executive summary. It explains the various factors that constitute an important part of the market. It includes market definition and scope with a detailed explanation of market drivers, opportunities, restraints, and threats.

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Leadership assessment Exchange software market competitors: – eMoneyexchangesoft, Conotoxia, Banking Circle Real-time FX, Thomson Reuters FX Trading, CEIFX, AFEXDirect, DCS Foreign Currency Exchange, Broadridge FX, Biz4x, Datasoft FxOffice, e2eFX, EGAR Focus

Based on region:-

  • Exchange software North America (United States, Canada, Mexico)
  • Exchange software Europe (Germany, France, United Kingdom, Italy, Russia)
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  • Exchange software South America (Brazil, Colombia)
  • This Pre and Post Pandemic FX Software Market Strategy Report can help consumers to:
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  • The Forex Software report provides information on the following pointers:
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  • 4. Competitive Assessment and Intelligence: Provides a comprehensive assessment of the market shares, strategies, products, and manufacturing capabilities of major Forex Software players
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This Forex Software report covers market insights including: shipment, value, revenue, net profit, etc., which gives a superior perspective to the buyer. It also covers various districts and nations of the world to indicate the provincial market size, volume and value.

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The [names] the research methodologies used by the analysts play a vital role in how the publication has been collated. Analysts used primary and secondary research methodologies to create a comprehensive analysis. For a fair and precise analysis of the overall situation Exchange software market, analysts have bottom-up and top-down approaches.

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Competitive rivalry of forex software

The Foreign Exchange Software research report includes an analysis of the competitive landscape present in the global market Exchange software market. It includes an assessment of existing and upcoming trends that players can invest in. Additionally, it also includes an assessment of the players’ financial prospects and explains the nature of the competition.

Strategic points covered in the forex software table of contents as follows:

Chapter 1: Introduction, Product Scope, Foreign Exchange Software Market Driver, Market Risk, Market Overview and Global Market Opportunities Exchange software market

Chapter 2: Assess the world’s leading manufacturers Exchange software market which includes its revenue, sales and product price

Chapter 3: Displaying the competitive nature of Foreign Exchange Software among key manufacturers, with market share, revenue and sales

Chapter 4: Global presentation Exchange software market by regions, market share and with revenue and sales for the projected period

Foreign exchange software report Chapters 5, 6, 7, 8 and 9: To assess the market by segments, by countries and by manufacturers with revenue and sales sharing by key countries in these various regions

Find more research reports on Foreign exchange software industry. By JC Market Research.

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The latest currency war may just be a skirmish https://spectacles17e18e.org/the-latest-currency-war-may-just-be-a-skirmish/ Thu, 23 Jun 2022 18:05:09 +0000 https://spectacles17e18e.org/the-latest-currency-war-may-just-be-a-skirmish/ Placeholder while loading article actions There is a lot of turmoil in the forex market about a new “currency war” breaking out, with countries and central banks taking steps to prop up their weakened currencies to offset the strengthening US dollar. The last currency war was a decade ago, but this one was pretty much […]]]>
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There is a lot of turmoil in the forex market about a new “currency war” breaking out, with countries and central banks taking steps to prop up their weakened currencies to offset the strengthening US dollar. The last currency war was a decade ago, but this one was pretty much the opposite: finding ways to reverse the massive appreciation of local currencies due to the rapidly depreciating dollar. Either way, the last battle may end before it really begins.

To understand why, we have to go back even further – before the global pandemic, before the European debt crisis, before the global financial crisis – to the early 2000s, when global monetary policies were calibrated on real economic fundamentals rather than prevent economies from collapsing. At the time, one of the main drivers of exchange rates was the US current account deficit, and the dollar rose and fell steadily depending on whether the deficit contracted or expanded. Admittedly, this measure is not on par with unemployment or inflation. when it comes to economic importance, but it is essential for the foreign exchange market because by including investment flows in addition to exports and imports, it is the broadest measure of trade. And 20 years ago, the deficit was growing rapidly, from around $50 billion near the end of the last century to over $200 billion in 2005. As a result, the United States needed to attract billions of dollars per day to fund the deficit. Naturally, this had a negative effect on the greenback, with the US dollar index plunging around 33% between July 2001 and the end of 2004.

The current account deficit improved steadily from then on, but the pandemic hit and global trade was disrupted. The shortfall rose from about $100 billion at the end of 2019 to $291.4 billion at the end of the first quarter, the U.S. Commerce Department said Thursday. At 4.8% of gross domestic product in current dollars, the deficit has returned to the level of the period when the dollar was depreciating rapidly.

All of this wouldn’t matter much if the United States were attracting more and more foreign investment to finance the deficit, but that may not be the case anymore. The Treasury Department said last week that foreign holdings of US Treasuries fell nearly $300 billion in the first four months of the year. Although the amount is only a small fraction of the $23.3 trillion in outstanding marketable US government debt, and foreigners still hold some $7.4 trillion of it, it is the direction that matters. Then there are the Federal Reserve’s holdings of treasury bills on behalf of foreign central banks and sovereign wealth funds. This account has grown from $3.13 trillion at the start of 2021 to $2.99 ​​trillion recently. Again, not a huge amount, but the steering is concerning. Perhaps most worrying of all, however, is the erosion of the dollar’s status as the world’s premier reserve currency. Although the International Monetary Fund estimates that the greenback represents 58.8% of global foreign exchange reserves, this is down from a peak of 72.7% in 2001 and the lowest percentage since 1996.

Demand for safe-haven assets amid the pandemic and rising relative interest rates have certainly supported the US currency, with the dollar index up around 17% since the start of 2021. This has exerted enormous pressure on other currencies. For example, the Bloomberg Euro Index fell 10%; the Bloomberg British Pound Index is down more than 7% since May 2021; The Japanese yen plunged 20%; the MSCI EM Currency Index is down 4.61% since the end of February alone.

Certainly, a weaker currency brings certain advantages. On the one hand, it makes a country’s exports more affordable. But that hardly matters when global trade volumes are still incredibly depressed due to supply chain disruptions. Additionally, officials are generally more concerned with the speed of currency movements, which can disrupt an economy as businesses have little time to adjust. As noted by my Bloomberg News colleagues Amelia Pollard and Saleha Mohsin, Isabel Schnabel of the European Central Bank highlighted a chart in February showing how much the euro had weakened against the dollar. The head of the Bank of Canada, Tiff MacKlem, then lamented the decline of the dollar of this country. Swiss National Bank President Thomas Jordan then hinted that he would like to see a stronger franc.

In the case of the United States, a weaker currency could further reduce the incentive for foreign investors to buy dollar-denominated assets, making it difficult to finance record budget and trade deficits. This could mean higher borrowing costs for government, businesses and consumers. It’s been two decades since the US current account deficit boosted global money markets, but that could be about to change, and in a big way.

• Dollar downtrend just beginning: Stephen Roach

• Why the dollar is stronger than it looks: Richard Cookson

• US debt is massive, growing and under control: Gary Shilling

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Robert Burgess is the editor of Bloomberg Opinion. Previously, he was Global Editor of Financial Markets for Bloomberg News.

More stories like this are available at bloomberg.com/opinion

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US stocks jump 2% after recent sell-off; the yen falls against the dollar https://spectacles17e18e.org/us-stocks-jump-2-after-recent-sell-off-the-yen-falls-against-the-dollar/ Tue, 21 Jun 2022 22:04:00 +0000 https://spectacles17e18e.org/us-stocks-jump-2-after-recent-sell-off-the-yen-falls-against-the-dollar/ S&P 500 closes over 2% US Treasury Yields Rise The yen plunges against the dollar Crude Oil Settles Higher NEW YORK, June 21 (Reuters) – Shares on global indices rose sharply on Tuesday, with major U.S. stock indexes each ending up more than 2% after a recent selloff, while the Japanese yen fell against the […]]]>
  • S&P 500 closes over 2%
  • US Treasury Yields Rise
  • The yen plunges against the dollar
  • Crude Oil Settles Higher

NEW YORK, June 21 (Reuters) – Shares on global indices rose sharply on Tuesday, with major U.S. stock indexes each ending up more than 2% after a recent selloff, while the Japanese yen fell against the dollar US to its lowest level since October. 1998.

Wall Street soared as participants returned from a long weekend, with investors buying growth stocks in megacaps and energy companies hit last week by global economic concerns. Read more

“After consecutive weeks of 5% declines, you’ve pushed the ball underwater enough now that we’re getting a rebound,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

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But, Nolte said, “interest rates keep going up. Oil keeps going up.”

Energy shares rose along with oil prices. Oil gained on strong summer fuel demand. read more The S&P 500 Energy Index (.SPNY) jumped 5.1%.

Last week, the S&P 500 confirmed it was in a bear market as investors sold stocks amid concerns over whether the Federal Reserve would be able to tame inflation without triggering a recession. . Read more

Investors also expect interest rate hikes from other major central banks.

The Dow Jones Industrial Average (.DJI) rose 641.47 points, or 2.15%, to 30,530.25, the S&P 500 (.SPX) gained 89.95 points, or 2.45%, to 3,764.79 and the Nasdaq Composite (.IXIC) added 270.95 points, or 2.51%, to 11,069.30.

The pan-European STOXX 600 index (.STOXX) rose 0.35% and the MSCI gauge of stocks across the world (.MIWD00000PUS) gained 1.91%.

Yields on US Treasuries rose as the risk aversion mode that weighed on US markets last week took a break.

Benchmark 10-year yields climbed to 3.303% from their close of 3.239% at the end of last week.

All eyes are now on Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee on Wednesday for clues on rates.

Goldman Sachs said it now believes there is a 30% chance the US economy will tip into a recession within the next year, up from its previous forecast of 15%. Read more

In the foreign exchange market, the yen hit a new low in 24 years. Read more

Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it an outlier among other major central banks.

The dollar index was little changed at 104.41, but was broadly supported by expectations of rate hikes at upcoming Fed meetings.

Brent crude futures rose 52 cents, or 0.5%, to settle at $114.65 a barrel. The US West Texas Intermediate (WTI) crude contract for July expired on Tuesday, closing at $110.65, with a gain of $1.09, or 1%. The most active August contract rose $1.53 to $109.52.

Spot gold fell 0.3% to $1,832.77 an ounce.

Bitcoin last rose 1.56% to $20,876.57.

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Additional reporting by Elizabeth Howcroft in London; also by Devik Jain and Anisha Sircar; Editing by Louise Heavens, Chizu Nomiyama, Will Dunham, Mark Heinrich and Deepa Babington

Our standards: The Thomson Reuters Trust Principles.

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The Swiss Shocker, the British Turn, the Japanese Puzzle https://spectacles17e18e.org/the-swiss-shocker-the-british-turn-the-japanese-puzzle/ Mon, 20 Jun 2022 05:44:19 +0000 https://spectacles17e18e.org/the-swiss-shocker-the-british-turn-the-japanese-puzzle/ The title of my column last week was “Is 50 the new 25?” Apparently so – even the Swiss National Bank (SNB) hiked 50 basis points, the first change to its key rate since 2015. Although Goldman Sachs signaled the possibility of a change, it was hardly a consensus. Of the 20 forecasts on Bloomberg, […]]]>

The title of my column last week was “Is 50 the new 25?” Apparently so – even the Swiss National Bank (SNB) hiked 50 basis points, the first change to its key rate since 2015.

Although Goldman Sachs signaled the possibility of a change, it was hardly a consensus. Of the 20 forecasts on Bloomberg, only one – Citigroup – predicted a change, and even that was only 25 basis points. Even GS itself did not foresee any change! So that really took the market by surprise (he says, trying to explain why he was wrong too).

Additionally, the SNB has changed its mind about the CHF, which it has said for years is “highly valued”. SNB Chairman Jordan said:

Since the last monetary policy review, developments in the exchange rate of the Swiss franc have also contributed to the rise in inflation. The Swiss franc depreciated in trade-weighted terms, despite rising inflation abroad. As a result, inflation imported into Switzerland from abroad has increased. Another consequence of this depreciation coupled with significantly higher inflation abroad is that the Swiss franc is no longer highly valued.

I must say that I disagree with President Jordan. On the one hand, it is true that the real (= inflation-adjusted) value of the CHF has fallen since the March meeting.

On the other hand… according to the OECD’s purchasing power parity calculation method, the CHF is still “highly valued” vs EUR = more than 50% overvalued, in fact.

Chart

According to this methodology, only the NOK is close to the fair value against the CHF.

Chart

To make matters worse, the SNB changed its policy from one-way intervention to two-way. Earlier, they said the SNB “stands ready to intervene in the foreign exchange market if necessary, in order to counter the upward pressure on the Swiss franc.” Now, their official statement reads: “To ensure appropriate monetary conditions, the SNB is also prepared to be active in the foreign exchange market if necessary.” It’s a bit vague, isn’t it? President Jordan clarified what this means: “If there were to be an excessive appreciation of the Swiss franc, we would be ready to buy foreign currencies. If the Swiss franc were to weaken, we would also consider selling foreign currencies.” It’s a huge change for one of the most active countries in the world to intervene to prevent its currency from appreciating.

Switzerland has 925 billion francs (952 billion dollars) in reserves, the third largest foreign exchange reserves in the world, after China (3.188 billion dollars) and Japan (!.209 billion dollars). Keep in mind that China’s annual GDP is $19.9 billion, Japan’s is $4.9 billion, and little Switzerland is $842 billion. In other words, Switzerland has more than a year of GDP stored in its foreign exchange reserves. It has considerable firepower if it wants to prevent its currency from depreciating. Moreover, the SNB is one of the few central banks to hold equities in addition to bonds. The risk here is that he sells some of his $177.3 billion in US stocks.

fxsoriginal

However, I am not too worried about this as I can hardly imagine a situation where the SNB thinks its currency is getting too weak.

Meanwhile, the Bank of England voted for a 25 basis point hike as expected, but three of the nine members of the Monetary Policy Committee (MPC) voted for a 50 basis point hike. Also, the tone of the forward guidance was much, much tougher. Last month they said that “most Committee members believe that some degree of additional monetary policy tightening may still be appropriate in the months ahead. There are risks on both sides of this judgment…”

No disagreements or hedging bets this time around! No “most members” or “may still be appropriate…” They said very clearly:

The MPC will take the necessary measures to sustainably bring inflation back towards the 2% medium-term objective, in accordance with its mission. The magnitude, pace and timing of any further Bank Rate increases will reflect the Committee’s assessment of economic prospects and inflationary pressures. The Committee will be particularly attentive to indications of more persistent inflationary pressures and will act forcefully in response if necessary.

“Acting strong” probably means “increasing 50 bps”.

The problem is, what is the purpose of raising interest rates? It’s to slow down the economy. But the UK economy is already slowing and the OECD predicts the country’s economy will stagnate next year. In this context, one has to wonder what effect this will have on slowing the economy further. The MPC argued that “not all of the excess inflation can be attributed to world events.” “There was also a role for interactions with domestic factors, including the tight labor market and corporate pricing strategies,” they said. We must therefore “loosen” the labor market (= increase unemployment) and above all convince companies that inflation will not stay like that so as not to increase prices too much. It will be interesting to see if they succeed.

Unlike the Swiss shock and the Bank of England’s hawkish turn, the Bank of Japan simply stayed on its well-worn path. His only concession to the changing global environment was to insert a small comment on exchange rate surveillance in his statement after the meeting (“…there is a need to pay appropriate to developments in financial and foreign exchange markets and their impact on economic activity and prices in Japan.”).

This may be a sign that they are worried about the currency, but so far there is no indication that they plan to do anything about these concerns. On the contrary, they even retained their easing bias (the BoJ “will not hesitate to take additional easing measures if necessary; it also expects that the key short and long interest rates term remain at or below their current levels”). usually there was only one dissent, from Mr. Kataoka, who, as always, wanted to ease the policy further. So, while the Policy Board expressed concern about the weak yen, members unanimously decided not to change the policy that was causing it.

Nonetheless, the yen did not weaken much, if at all, implying that the outcome was roughly in line with expectations.

Meanwhile, it was a very expensive week for the BoJ after it bought 9.6 billion yen of Japanese government bonds (JGBs), or some $72 billion, to keep the JGB’s yield at 10 years under the ceiling of 0.25% that the Bank has set. with its “yield curve control” (YCC) policy. That’s more than the Fed and European Central Bank (ECB) were buying per month last year for much larger economies (GDP: US, $25.3 billion; Eurozone, 14.5 billion; Japan, $4.9 billion). Japan’s QE this week ran more than 20 times the pace of the Fed’s QE in 2021, adjusted for the size of the economy.

Can they continue to intervene like this? Of course, the central bank can create money and buy assets without limit, but if it continues like this, it will suck up all the JGBs and leave the market blocked, which is not good. The BoJ needs to lend an unprecedented 32.2 billion yen ($240 billion) of bonds to the market to make it work.

Chart

At the press conference following the meeting, BoJ Governor Kuroda denied that any change was likely. He said he did not believe the sustainability of the YCC policy was threatened and did not believe further review of the policy was needed.

Of course, everyone remembers that in 2015, the SNB called its EUR/CHF floor the “cornerstone” of its monetary policy just days before removing it without warning. “If you decide to exit such a policy, you have to take the markets by surprise,” Jordan said at the time. This is what the SNB did this week as well; will this be what the BoJ will do sooner or later?

I agree that they will have to change policy at some point, but probably not in the same way as the SNB. Japanese authorities do not like surprises, fearing they will cause the dreaded “market confusion”. We’ll probably get some clues from the Nikkei newspaper first.

Next week: Preliminary PMIs, inflation in Canada and Japan

After all the Sturm und Drang this week, next week will be much calmer. There are no major central bank meetings, although the market will see Fed Chairman Powell testify before Congress on Wednesday and Thursday. Monday is a holiday in the United States (Juneteenth). Usually three inflation figures are released during the week, but we already had inflation figures from the UK, so only two – Canada and Japan. And even at that, the Japanese figure isn’t all that interesting as it largely tracked Tokyo’s CPI, which came out about two weeks earlier.

The main point of interest for the week will be the preliminary Purchasing Managers’ Indices (PMIs) for major industrial economies. They should be uniformly lower, in line with the recent slowdown seen in many economies. This could curb investors’ appetite for risky assets, such as equities, and drive the AUD lower.

Chart

There are no forecasts available for Canada’s CPI yet (Wednesday), but here’s a chart of the latest data we have. Even all three core measures are above the Bank of Canada’s 1% to 3% target range. They will have to do something about it.

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The market recently increased its estimate of short-term tightening from the Bank of Canada.

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Japan’s national CPI will be released on Friday, but a) the year-over-year inflation rate is expected to remain unchanged, b) it is expected to be about the same as the previously released Tokyo CPI, and c) nobody cares anyway because we just heard from the Bank of Japan that they are not even considering “thinking about” raising rates anytime soon.

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There are very few US indicators released during the week. The only important ones are existing home sales (Tuesday) and new home sales (Friday). The housing market is an indicator of the Fed’s impact on the economy, as it is probably the most important interest rate sensitive sector (along with auto sales, perhaps). Given the sharp rise in mortgage rates recently and the tumble in housing starts and building permits announced on Thursday, it wouldn’t be surprising to see home sales plunge as well.

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As it stands, existing home sales are expected to fall 3.7% m/m, but new home sales are expected to rise 0.7%. We will see. These forecasts are subject to change without notice.

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Exchange rate hits new high of ¢694.43 in wholesale market – Q COSTA RICA https://spectacles17e18e.org/exchange-rate-hits-new-high-of-%c2%a2694-43-in-wholesale-market-q-costa-rica/ Sat, 18 Jun 2022 13:08:34 +0000 https://spectacles17e18e.org/exchange-rate-hits-new-high-of-%c2%a2694-43-in-wholesale-market-q-costa-rica/ QCOSTARICA – Despite an injection of US$32.1 million from the Banco Central de Costa Rica (BCCR) – Central Bank, the exchange rate hit another high, rising 8.17¢ this week. The dollar closed this Friday at 694.43¢ on the Mercado de Monedas Extranjeras (MONEX) – Foreign Currency Market, signifying a new maximum value for the currency. […]]]>

QCOSTARICA – Despite an injection of US$32.1 million from the Banco Central de Costa Rica (BCCR) – Central Bank, the exchange rate hit another high, rising 8.17¢ this week.

The dollar closed this Friday at 694.43¢ on the Mercado de Monedas Extranjeras (MONEX) – Foreign Currency Market, signifying a new maximum value for the currency.

On June 3, the high of 692.33¢ was reported, the day that, precisely, the Central Bank announced a series of measures to ease pressures on exchange rates.

The dollar exchange opened the week (Monday) at 686.26¢, according to data published by the Central Bank on its website.

In commercial banks, most reported a sell price of 699¢, while buying was between 681¢ and 685¢.

Screenshot of Banco Central

The increase in the exchange rate occurred despite BCCR intervention, in three of the five Monex Sessions, and sold for US$32.1 million to meet demand for currency from wholesale market participants. The injection of foreign currency accounted for 47% of the week’s total dollar buy-sell, with $67.5 million traded.

In addition, the Central Bank provided $20.6 million to non-bank public sector entities during this week. The currencies sold by the BCCR are taken from its international reserves which, until Thursday, showed a balance of 6.266 billion dollars.

Róger Madrigal, President of the Central Bank, announced a series of measures on the foreign exchange market on June 3. One was to reduce the time of Monex sessions to one hour per day, from 12 p.m. to 1 p.m. Previously, it was 10 a.m. to 1 p.m.

In addition, in order to recover its future reserves and be in a more comfortable position to intervene in the market, the institution has taken steps to request a loan of 1,000 million US dollars from the Fondo Latinoamericano de Reservas (FLAR ) – Latin American Reserve Fund.

In addition, the Board of Directors of the Central Bank agreed, this Wednesday, June 15, to increase the minimum legal reserve (percentage of deposits that entities must reserve at the Central Bank) for operations in colones. The entity will increase the percentage from the current 12% to 13.5% in the first half of July 2022, and to 15% from the second half of July 2022.

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Yen likely to fall against dollar in Q4 or later, economists say https://spectacles17e18e.org/yen-likely-to-fall-against-dollar-in-q4-or-later-economists-say/ Wed, 15 Jun 2022 06:45:00 +0000 https://spectacles17e18e.org/yen-likely-to-fall-against-dollar-in-q4-or-later-economists-say/ TOKYO, June 15 (Reuters) – The yen is likely to weaken further against the dollar for at least the rest of 2022, more than two-thirds of economists polled by Reuters said, pointing to the implications of the Bank of Japan or the only major central bank clings to a policy of ease. The BOJ is […]]]>

TOKYO, June 15 (Reuters) – The yen is likely to weaken further against the dollar for at least the rest of 2022, more than two-thirds of economists polled by Reuters said, pointing to the implications of the Bank of Japan or the only major central bank clings to a policy of ease.

The BOJ is sticking to the stimulus, stepping up its bond purchases to defend its yield cap even as the US Federal Reserve, already engaged in an aggressive campaign to hike rates by half a point, looks ready to debate an even bigger 75 basis point move on Wednesday. Read more

The resulting yen weakness is increasingly becoming a source of contention for policymakers. This hurts household budgets by driving up the cost of living, which is already rising due to global inflation, offsetting the boost a cheaper currency gives exporters.

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The Japanese currency has lost more than 14% against the greenback so far this year, briefly slipping to 135.58 yen to the dollar on Wednesday, its lowest since October 1998, which was a time of global financial stress. after a Russian debt default.

Wednesday’s level was already close to the weakest forecast for the next 12 months provided by one of 47 currency strategists polled by Reuters just two weeks ago – 135.67 to the dollar.

The fall in the yen was so severe that it led the government and the central bank to issue a rare joint statement on Friday expressing concern. Read more

“The yen is likely to remain vulnerable to weakening as Fed rate hikes and higher long-term Treasury yields continue throughout the year,” said Takumi Tsunoda, senior economist at Shinkin Central. Bank Research Institute.

The risk of further declines in the yen will persist until the last quarter of the year, said nine of the 25 economists surveyed. Another four said the risk would persist until the first half of next year, and five said it would last until the second half of next year or later.

Only seven predicted the risk would run its course by the end of the next quarter, while none said the yen was at risk of further weakening.

In a multiple-selection question asking for the government’s most effective action to stem further weakening of the yen, 12 out of 25 economists chose to “reopen borders for more inbound tourists”.

This was followed by “press the BOJ to adjust monetary policies”, chosen by eight other respondents.

Letting in more foreign travelers would likely increase the demand for the yen. Japan began accepting chaperoned tourist groups this month, easing its previous COVID-19 border controls, which included a ban on almost all non-residents. Read more

Other options included “restart more nuclear power plants” (chosen by eight respondents), “continue verbal warnings” (six) and “no need to do anything in particular” (four).

The BOJ is expected to maintain its ultra-loose monetary policy in its next two-day rate review, which ends on Friday, according to the June 3-13 poll. Nearly 80% of 28 economists said the bank would not adjust its policies until the end of 2023 or later, and all but two expected such a change to undo the easing.

Japan’s economy is expected to grow 4.1% annualized in the current quarter, slower than the 4.5% projected in the May survey, according to median forecasts from 37 analysts.

The world’s third-largest economy is expected to grow 2.2% in the fiscal year beginning in April 2022 and 1.6% in fiscal 2023.

Core consumer prices, which exclude volatile fresh food prices, will likely rise 2.1% this fiscal year, before slowing to 1.1% in fiscal 2023, according to the survey.

(For more stories from the Reuters Global Economic Survey:)

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Reporting by Kantaro Komiya; Poll by Md Manzer Hussain and Anant Chandak; Editing by Ross Finley and Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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Dollar hits all-time high and rises to Rs204 in interbank trade – Business https://spectacles17e18e.org/dollar-hits-all-time-high-and-rises-to-rs204-in-interbank-trade-business/ Mon, 13 Jun 2022 07:19:15 +0000 https://spectacles17e18e.org/dollar-hits-all-time-high-and-rises-to-rs204-in-interbank-trade-business/ The US dollar hit an all-time high of 204 rupees against the local currency in the interbank market on Monday, with analysts attributing the rupee’s decline mainly to pending oil-related payments and lower foreign exchange reserves. According to the Forex Association of Pakistan (FAP), the rupee depreciated sharply from 1.85 to an all-time low against […]]]>

The US dollar hit an all-time high of 204 rupees against the local currency in the interbank market on Monday, with analysts attributing the rupee’s decline mainly to pending oil-related payments and lower foreign exchange reserves.

According to the Forex Association of Pakistan (FAP), the rupee depreciated sharply from 1.85 to an all-time low against the dollar since last week’s close at 202.35 rupees.

Meanwhile, on the open market, the greenback was trading at Rs206.

Malik Bostan, who heads the FAP, linked the rise in the value of the dollar to the payment of oil import bills. He said the rupiah will remain under pressure until the deal with the International Monetary Fund (IMF) is finalized.

“The targets set for imports and exports in the next fiscal year show a huge gap, which shows that also next year the market will have to acquire loans,” Bostan continued, adding that “speculation” was also on the rise.

He suggested that the government impose a ban on dollar futures trading to stabilize the rupee.

Zafar Paracha, general secretary of the Association of Exchange Companies of Pakistan, attributed the rise in the dollar to foreign companies that withdrew their profits from the country.

“Exporters are also not bringing foreign currency into the country so that they can earn excess profits, which has created a gap between supply and demand for dollars,” he said.

Parsha further pointed out that the State Bank of Pakistan (SBP) should ask exporters to bring their earnings back into the country so that the supply of dollars will increase.

Meanwhile, Asad Rizvi, former treasury chief at Chase Manhattan Bank, Told Mettis Global – a web portal of financial data and analysis – that even if the budget had been presented, “the fate of the PKR movement will depend on the FATF (Financial Action Task Force) and incoming news from the IMF”.

The latest episode of the rupiah’s decline against the dollar began in June, with the greenback ending the local currency’s five-day winning streak.

According to data released by the SBP, the rupee started appreciating against the US dollar on May 27 and has continued to appreciate for five consecutive sessions. This was after the greenback continued to rise due to the country’s increased imports, dwindling foreign exchange reserves and uncertainty surrounding the IMF’s $6 billion facility, which has since stalled. april.

On May 19, the dollar hit a peak of 200 rupees for the first time, and respite for the rupee only came after the government raised oil prices by a whopping 30 rupees per litre, opening the way to the release of a billion dollars. tranche of the International Monetary Fund. Subsequently, the greenback lost Rs2.25 in a single session to fall to Rs199.76 on May 27.

The recovery of the dollar had started on June 3. It was described as temporary by traders, who attributed it to oil price shocks which would increase inflation.

They said Dawn that they expected inflows from the IMF and that China would once again support the local currency.

Finance Minister Miftah Ismail had also expressed hope for an agreement with the IMF and the renewal of a $2.3 billion Chinese loan that would improve the country’s foreign exchange reserves.

The SBP’s foreign exchange reserves fell by $497 million to $9.2 billion in the week ended June 3.

The SBP reported that the country’s total foreign exchange reserves fell to $15.176 billion while commercial bank holdings were $5.950 billion during the week.

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US examines Swiss monetary practices https://spectacles17e18e.org/us-examines-swiss-monetary-practices/ Fri, 10 Jun 2022 15:32:22 +0000 https://spectacles17e18e.org/us-examines-swiss-monetary-practices/ WASHINGTON — The Treasury Department said Friday it was concerned that some United States trading partners were taking steps to weaken their currency and gain unfair trade advantages against the United States — but declined to qualify any currency manipulator country. In its semi-annual foreign exchange report, the Treasury Department named Switzerland, which in 2020 […]]]>

WASHINGTON — The Treasury Department said Friday it was concerned that some United States trading partners were taking steps to weaken their currency and gain unfair trade advantages against the United States — but declined to qualify any currency manipulator country.

In its semi-annual foreign exchange report, the Treasury Department named Switzerland, which in 2020 was seen as a manipulator, as the worst offender and said it was closely monitoring the foreign exchange practices of Taiwan and Vietnam. Treasury Department officials have been involved in “enhanced bilateral engagement” with the three countries in recent months.

“The administration continues to advocate strongly for our major trading partners to carefully calibrate policy tools to support a strong and sustainable global recovery,” Treasury Secretary Janet L. Yellen said in a statement. “An uneven global recovery is not a resilient recovery.”

The United States has three sets of thresholds that it uses to determine if a country is weakening the value of its currency. It has wide discretion to determine whether a country manipulates the exchange rate between its currency and the dollar to gain a competitive advantage in international trade.

A government can remove the value of its currency by selling it in foreign exchange markets and hoarding dollars. By lowering the value of its own currency, a country can make its exports cheaper and more competitive to sell in world markets.

The Trump administration called Switzerland and Vietnam currency manipulators in 2020, but the Biden administration, seeking a more diplomatic approach, removed the designation.

A Treasury official said the United States had had constructive talks with Switzerland over the past year, noting that its economy faced unusual factors as it was a small, open European economy with a currency, the franc, considered a safe haven.

Currency manipulation tags are meant to trigger talks with the United States and may involve input from the International Monetary Fund. If the Treasury Department’s concerns are not resolved, the United States could impose a series of sanctions, including tariffs.

Mark Sobel, chairman of the Official Monetary and Financial Institutions Forum, noted that the most pressing issue in global currency markets was the strength of the dollar.

“The real issue these days is the sharp appreciation of the dollar, which has clearly been generated by divergences in monetary policy between a tightening Fed and others that are less aggressive,” Sobel said. “It would be hard to blame others.”

The United States has added Vietnam and Taiwan to its currency “watch lists,” a tally that includes China, Japan, Korea, Germany, Italy, India, Malaysia, Singapore, Thailand and Mexico.

The Treasury Department said it was closely monitoring the foreign exchange activities of China’s state-owned banks. He criticized China for providing “very limited transparency” about how it manages its currency.

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