European Business Magazine (February 2)
“Xi Jinping wants the renminbi to become a global reserve currency to reduce China’s dependence on the US dollar, strengthen financial sovereignty and expand Beijing’s influence over global trade and capital flows. While the currency’s use in trade settlement is growing, capital controls and limited market access remain key barriers to full reserve-currency status.”
Tags: Barriers, Capital controls, Capital flows, China, Currency, Dependence, Dollar, Financial sovereignty, Global trade, Influence, Limited market access, Renminbi, Reserve currency, Trade settlement, U.S., Xi
MarketWatch (January 26)
“The U.S. dollar took another hit on Monday, weakening to its lowest levels in four months, as talk of a coordinated intervention to prop up the competing Japanese yen intensified. A stronger Japanese currency could end up translating into trouble for U.S. stocks, as it did on Aug. 5, 2024, when a sharp unwinding of the yen carry trade was blamed for a selloff in global equities.”
Tags: Blamed, Carry trade, Coordinated intervention, Currency, Dollar, Japan, Prop up, Selloff, Stocks, U.S., Unwinding, Weakening, Yen
Financial Times (June 8)
“Donald Trump’s gyrations on trade policy have not broken global financial markets just yet — but what is happening in Hong Kong shows they are feeling the strain.” For over a month, Hong Kong’s interest rates remained fixed at just above 0%, which is peculiar, “Its currency is pegged to the US dollar” so this presents a prime arbitrage opportunity, which is going untaken. “This little episode reveals a disturbing fragility. Markets may appear to be taking all of the Trumpian disruption in their stride, but when a dislocation of this sort persists for more than a month, it is a warning sign. Watch out for trouble ahead.”
Tags: 0%, Arbitrage, Broken, Currency, Dislocation, Dollar, Fragility, Global financial markets, Gyrations, Hong Kong, Interest rates, Peg, Strain, Trade policy, Trump, U.S.
Market Watch (May 5)
“Taiwan’s currency is exploding,” as are fears about the “$767 billion of foreign assets held by Taiwan’s life insurers.” In a “classic case of liability and asset mismatching,” Taiwan’s life insurers “have put their assets into U.S.-dollar-denominated bonds… without hedging the currency risk.” This has resulted in “what’s called a 19-sigma shock,” as the Taiwanese dollar strengthened dramatically, exceeding “the typical move by 19 standard deviations in a world where a 3-sigma event is…. much rarer than even 1 in a trillion.”
Tags: $767 billion, 19-sigma shock, Bonds, Currency, Currency risk, Dollar-denominated, Exploding, Fears, Foreign assets, Hedging, Liability, Life insurers, Mismatching, Taiwan
Wall Street Journal (March 10)
Mr. Trump issued a new executive order directing the Treasury Department to take the first steps in establishing what he refers to as “a crypto version of Fort Knox.” This proposal “invites government abuse.” Basically, a “government crypto reserve serves no good purpose while creating an opportunity for political bad behavior. Let private investors speculate all they want without the government having a stake in crypto-currency prices.”
Tags: Abuse, Bad behavior, Crypto, Crypto reserve, Currency, Executive order, Fort Knox, Government, Investors, Prices, Private, Speculate, Stake, Treasury Department, Trump
Financial Times (June 5)
“India’s benchmark Nifty 50 rose 2.3 per cent following a sharp sell-off on Tuesday after a shock election result.” Meanwhile “Japan’s Topix index led losses as it dropped 1.4 per cent, driven lower by a decline in the financial and energy sectors. The yen was the region’s worst-performing currency as it fell 0.6 per cent against the dollar to ¥155.75.”
Tags: Benchmark, Currency, Decline, Election, Energy, Financial, India, Japan, Nifty 50, Sell-off, Shock, Topix, Worst-performing, Yen
The Economist (May 4)
“It is easy for investors to lose a fortune in the financial markets—and even easier for governments.” When Japan tried to prop up the yen in 2022, the nation “spent more than $60bn of its foreign-exchange reserves,” but supporting a currency “is expensive and futile.” Since breaking the ¥160/$1 barrier, there are rumors of another intervention. As long as the giant interest rate gap exists with the U.S., Japan would be “wrong to try to prop up the yen.”
Tags: $60bn, ¥160/$1, 2022, Currency, Expensive, Financial markets, Forex, Futile, Governments, Interest rate, Intervention, Investors, Japan, Reserves, Yen
Bloomberg (March 28)
“The risks are piling up for Japan’s currency, stocks and bonds as the nation’s fiscal year draws to an end right when many global markets close for Easter — and less than two weeks after the central bank hiked interest rates.”
Tags: Bonds, Central bank, Currency, Easter, Fiscal year, Global markets, Interest rates, Japan, Piling up, Risks, Stocks
Bloomberg (September 21)
“The value of the yen has slumped to the lowest on record, as measured against a broad basket of its peers and adjusted for inflation,” the Bank for International Settlements found based on data from 1970 onward. This serves to “underscore the pressure on the Bank of Japan to normalize its ultra-easy monetary regime, which continues to weigh down the nation’s interest rates and weaken the currency. The drop in the so-called real effective exchange rate means Japanese have to pay more for imported goods and services at a time when wage growth is failing to compensate for inflation.”
Tags: BIS, BOJ, Currency, Imports, Inflation adjusted, Interest rates, Japan, Normalize, Pressure, Real effective exchange rate, Record, Slumped, Ultra-easy, Wage growth, Yen
The Guardian (September 27)
“Turmoil in financial markets which saw the pound fall to a record low against the dollar dominates today’s front pages. The currency tumbled as investors lost confidence in the UK’s public finances after last Friday’s mini-budget.”
Tags: Confidence, Currency, Dollar, Dominates, Financial markets, Investors, Pound, Public finances, Record low, Tumbled, Turmoil, UK
