Posts tagged 'Foreign Exchange'

The wonders of the FX universe

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jan 11 11:47 | Comment |

Dark matter may more commonly be associated with physics, space exploration and Professor Brian Cox, but, according to Deutsche Bank’s FX strategist George Saravelos, there’s a good chance that it’s becoming a recognisable force in the world of foreign exchange too.

Of course, whilst you need complex structural analysis of the universe to detect the real dark stuff, in FX its presence is arguably more easily sniffed out. Mostly, says Saravelos, via the closer inspection of short-term derivative flows and the murky parts of balance of payment statistics. Read more

What China really wants

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Dec 19 2012 10:09 | Comment |

China announced last week that its State Administration of Foreign Exchange would remove the $1bn limit for foreign sovereign wealth funds, central banks and monetary authorities buying Chinese assets through the Qualified Institutional Investor Programme (QFII).

David referenced that this might turn out to be pretty significant as reserve managers are currently desperate to diversify their holdings out of euro and dollar.

But there’s another important factor to consider too. China is not a benevolent agent which just does things for the sake of pleasing other people. If it chooses to act you can bet your bottom yuan that it’s because it suits its own interests to do so. Read more

FT Alphaville also available for your ears, FX edition

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.

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| Nov 20 2012 15:42 | Comment |

As a special treat, the below podcast.

FT Alphaville reporter David Keohane met Simon Derrick, chief currency strategist at BNY Mellon. They geeked out on various FX topics. Read more

The RBA – leaning against the wind

| Oct 29 2012 01:06 | Comment |

Is the Reserve Bank of Australia intervening in the market to hold down the remarkably resilient Aussie dollar? That’s the question commentators and economists are asking themselves following the publication of data at the end of last week that showed a significant increase in the pace of foreign exchange accumulation (admittedly from a low very low base) in August and September. Read more

Another day, another SNB rumour

| May 18 2012 17:46 | Comment |

Swiss franc traders have been pretty bored of late, with the euro/Swiss franc flatlining for months. But it seems they’ve had some rare excitement this week: someone out there is buying as many euros against the franc as traders care to offload.

Naturally, everyone is assuming this buyer is the SNB — in disguise. Read more

Presenting…. the totally exciting Euromoney FX survey 2012

| May 09 2012 22:30 | Comment |

So here they are! The results of 2012′s Euromoney survey — based on non-gamed voting by, er, clients!

And… drum roll please… it’s… Deutsche at the global top! Read more

Space opera, beyond finance edition

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Feb 29 2012 12:26 | Comment |

FT Alphaville spent a lot of last week hanging out at Lift12, a Geneva-based technology conference exploring the social implications of new technologies.

We were particularly drawn to the Beyond Finance session last Thursday, which tried to take a peek at how technology might change the world of banking and money in the years to come. Read more

Japan confirms stealth intervention to limit yen

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Feb 07 2012 10:13 | Comment |

The Japanese government has confirmed that it intervened unannounced into foreign-exchange markets to weaken the yen last year, for the first time since 2004, the FT reports. Ministry of Finance data released on Tuesday showed Japan carried out Y1.02tn ($13.3bn) worth of unannounced intervention during the first four days of November, after selling a record Y8.07tn on October 31st, when the yen climbed to a post-war high of 75.35 against the dollar. This so-called “stealth intervention” had been widely anticipated, given discrepancies between the rise in yen balances implied by Bank of Japan reserve balance data, and the Y9.09tn of yen-selling MoF had earlier disclosed for the period between October 28th and November 28th. Even so, the more detailed breakdown may increase pressure on Japan from the US. A December report from the US Treasury Department sharply criticised the G7 nation for its recent unilateral interventions to curb yen appreciation. The BoJ has sold the currency four times since late 2010, under orders from MoF. Read more

China’s foreign reserves not so hot

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jan 16 2012 10:36 | Comment |

China’s first quarterly decline in its forex reserves since 1998 has been described as a result of “hot money” leaving China. But there are a few other reasons — probably bigger ones.

Firstly, though, the scale of this reversal versus the usual trend was smaller than it appeared, according to Jens Nordvig at Nomura. And some of it was a response to exchange rates: Read more

Japan moves closer to $52bn yen intervention

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Oct 21 2011 05:20 | Comment |

The Cabinet of Japanese Prime Minister Yoshihiko Noda signed off on steps to deal with the soaring yen on Friday, the WSJ reports. Fleshing out proposals made last month, Tokyo’s plan aims to curb further surges in the yen while exploiting its strength. Bloomberg says a government document shows the plan would add 2,000bn yen ($26bn) to the 8,000bn yen in foreign-exchange reserves being shifted to the state-run Japan Bank for International Cooperation to aid exporters and spur acquisitions overseas. A further 2,000 yen will be allocated to encourage investment in domestic plants and to hire workers, according to another document that has not been made public, says the news agency. The yen hit a record high against the dollar in August and has remained near those levels since. Read more

BNY Mellon sued for overcharging on currency trades

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Oct 05 2011 10:16 | Comment |

The city and state of New York and US Department of Justice have filed separate lawsuits against Bank of New York Mellon, alleging the world’s largest custody bank defrauded pension funds, US banks and millions of investors nationwide on currency transactions for 10 years, the FT reports. Tuesday’s New York action, which seeks to recover more than $2bn in alleged ill-gotten gains, marks the third lawsuit this year filed by a state legal officer against the bank. In August, Florida and Virginia sued the company for allegedly wrongfully overcharging their local pension funds on foreign-exchange trades. According to the Wall Street Journal, the suits allege that BNY Mellon defrauded or misled state and public pension funds, private companies, universities and banks in a decade-long scheme of overcharging for foreign exchange. The move by the U.S. attorney in Manhattan is the first time federal prosecutors have filed a legal action in the mushrooming currency case. In a statement, a BNY Mellon spokesman said: “The U.S. Attorney does not appear to have made any serious independent effort to assess the validity of the claims in this lawsuit. We will fight these claims vigorously and are confident we will prevail.” Read more

BNY Mellon sued over currency rates

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Oct 05 2011 05:27 | Comment |

The city and state of New York and US Department of Justice have filed separate civil lawsuits against Bank of New York Mellon, alleging the world’s largest custody bank defrauded pension funds, US banks and millions of investors nationwide on currency transactions for 10 years, the FT reports. Tuesday’s New York action, which seeks to recover more than $2bn in alleged ill-gotten gains, marks the third lawsuit this year filed by a state legal officer against the bank. In August, Florida and Virginia sued the company for allegedly wrongfully overcharging their local pension funds on foreign-exchange trades. The federal lawsuit also represents one of the few actions brought against a Wall Street bank by the Obama administration, which has had to defend itself against accusations that it has taken a soft line against financial fraud. The bank said it would fight the claims vigorously. Read more

SNB shows some pegleg

| Aug 15 2011 20:15 | Comment |

SNB: “Leave our dear Swissie alone. Seriously, leave it alone.”

Investors: ”But we don’t know where else to hide.” Read more

Le plan, negatifs taux d’intérêt – redux

| Aug 03 2011 15:48 | Comment |

Oh dear.

The ‘psychological shock’ of Wednesday’s moves by the Swiss National Bank to stem the rapid rise of the franc is already wearing off — at least in the FX market. Read more

Alternatives to the USAAA, dollar edition

| Jul 27 2011 19:02 | Comment |

Over the last few years we’ve all got used to the familiar risk-on and risk-off patterns.

But as you’ve probably heard, the US’s AAA credit rating is facing a possible downgrade, which could decouple the correlation between the US dollar and risk assets, according to Nomura. Read more

What’s a Swiss central bank to do?

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jul 14 2011 19:00 | Comment |

As has been well documented, the Swiss franc’s relentless rise has been causing no end of headaches.

Swiss exporters, Swiss banks and even Polish and Hungarian mortgage holders have all been affected. The Swiss National Bank, meanwhile, is stuck between a rock and a hard place. Read more

World Bank sees end to dollar’s hegemony

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| May 18 2011 09:57 | Comment |

The World Bank expects the US dollar to lose its solitary dominance in the global economy by 2025, as the euro and the renminbi establish themselves on an equal footing in a new “multi-currency” monetary system, the FT reports. The shift will be driven by the increasing power and strength of emerging market economies, with six countries – Brazil, China, India, Indonesia, Russia and South Korea – accounting for more than half of global growth in 14 years. According to the World Bank report – released on Tuesday – emerging economies will grow at a rate of 4.7 per cent between now and 2025, a much faster pace than advanced economies which are expected to grow by 2.3 per cent over the same time-frame. “The balance of global growth and investment will shift to developing or emerging economies,” said Mansoor Dailami, the lead author of the report. Read more

“Mostly meaningless blurbs”

| Apr 28 2011 13:06 | Comment |

Oh deary me.

Someone at a major European investment bank (known for its foreign exchange services) is possibly a touch red-faced right about now. Read more

Assessing the dollar’s weakness

| Apr 12 2011 18:33 | Comment |

How weak is the dollar?

A timely question asked by Goldman Sachs on Tuesday morning, what with the euro reaching a 15-month high of $1.45 earlier today. Indeed, on the face of it, there is weakness everywhere. Read more

Underestimate the force of a supply shock, do not

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Feb 28 2011 16:41 | Comment |

David Bloom’s currency strategy team at HSBC looks at the issue of oil and foreign exchange rates on Monday, arriving at a clear-cut conclusion.

Determining which currency in which to park one’s money when oil prices are on the rise is dependent on one thing and one thing only — whether said price rises are the result of demand forces or of a supply shock. Read more

The new volatility FX carry trade

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jan 26 2011 12:11 | Comment |

FT Alphaville wrote last year about how the Federal Reserve’s experimentation with quantitative easing — while managing to alleviate stress in money markets –  may have unwittingly transferred volatility into the foreign exchange market.

Now, a new paper posted on VoxEu by three business academics, Pasquale Della Corte, Lucio Sarno and Ilias Tsiakas, looks deeper at the issue — even speculating whether the volatility of foreign exchange has since become a new global carry trade. Read more

China’s forex reserves show record leap

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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| Jan 11 2011 21:06 | Comment |

China’s foreign exchange reserves jumped by a record $199bn in the last quarter of 2010, taking the total to $2,850bn and underlining the continuing imbalances in the global economy, reports the FT. Already the largest in the world, China’s reserves increased by 18.7 per cent over the course of 2010, including an increase of $194bn in the third quarter. Although China’s monthly trade surplus dropped in December, the continued strong increases in its foreign exchange reserves will bolster the case of critics who are calling for a more rapid appreciation of the renminbi. Currency and trade issues are likely to feature strongly when Hu Jintao makes a state visit to the US next week, amid renewed talk internationally about a “currency war’. Read more

Inside an FX IPO

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Nov 15 2010 20:38 | Comment |

FXCM, the US-based FX and securities broker, filed a prospectus to the Securities and Exchange Commission on Monday for an intended initial public offering later this month.

The terms show the company hoping to raise $211m by offering 15.1m Class A shares at a price range of $13-$15 — a mid-point of which would give the company a market value of $1.1 bn. Read more

FX still mopping up excess volatility

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Nov 09 2010 11:02 | Comment |

We wrote last week how ‘Bernanke’s put’ was potentially transforming into ‘Bernanke’s genie released‘ over in the FX markets.

On Tuesday, it seems, that offloading of volatility was still very much going on. Read more

Close, but no currency cigar at G20

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Oct 25 2010 09:02 | Comment |

Finance ministers at the G20 summit in Seoul have agreed on a framework designed to tackle large current account imbalances, but will wait until next month to agree specific guidelines, the FT reports. Quick translation — the dollar has been given a green light to weaken even further. The yen reached another 15-year high against the dollar in Asian and European trading on Monday, with the euro also testing recent strengths, Reuters says; while Bloomberg has a copy of the official G20 communique and reports that the summit’s main takeaway may have been to prod China once again on the renminbi’s weakness against the dollar. Read more

Geithner denies US bid to weaken dollar

| Oct 19 2010 09:21 | Comment |

US Treasury secretary Tim Geithner denied that the US was trying to devalue the dollar to boost its economy, the FT reports, as he attempted to ease tension in foreign exchange markets. However the WSJ reports that Mr Geithner also described China’s currency as “significantly undervalued.” Meanwhile, Brazil has raised inflow taxes in an attempt to control gains in the real, Bloomberg reports. Tax on foreigners’ investments in fixed-income securities was raised to 6 per cent, up from 4 per cent, while the levy on money brought in for the futures market was increased to 6 per cent, up from 0.38 per cent. Read more

Fed minutes and Intel cheer Asian stocks

| Oct 13 2010 10:11 | Comment |

Asian shares were on the rise with sentiment brightening after Japanese machinery orders increased more than expected and chipmakers gaining ground on Intel’s stronger-than-expected sales, reports the FT’s rolling global market overview. The FTSE Asia-Pacific Index was up 0.3 per cent as investors also responded to hints of additional quantitative easing to come from the US in the minutes of the latest Federal Reserve meeting. Commodity prices pared losses to remain near near two-year highs. Treasury bond yields were also higher, with 10-year bond yields rising 4 basis points off two-year lows, after the Fed also said it could tie its easing measures to growth, rather than to inflation. While inflation measures had ticked lower and lower, growth was more variable. The dollar was again on the back foot as the prospects for a further liquidity injection by the Fed harmed the currency. The US dollar index, which tracks the buck against a basket of its peers, was down 0.2 per cent to 77.13, just above 9-month lows. The yen was hovering above 15-year highs relative to the greenback, currently flat at Y81.80. The euro was up 0.3 per cent to $1.3957. Industrial resources have resumed their ascent as the dollar showed renewed weakness. Copper was up 0.4 per cent to $8,370, just shy of a two-year high. Oil was up 0.6 per cent to $82.14 a barrel. Gold was up 0.5 per cent to $1,356 an ounce, with more QE chatter adding to the metal’s attraction for paper currency doomsters. The S&P 500 in New York rose 0.4 per cent to a five month high as traders welcomed the Fed’s minutes and news of another M&A deal – this time Pfizer’s purchase of King Pharma for $3.6bn. Read more

Brazil’s Mantega warns of ‘currency war’

| Sep 28 2010 04:41 | Comment |

An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness, reports the FT. Mantega’s comments on Monday follow recent interventions by central banks, in Japan, South Korea and Taiwan in an effort to curb their currencies. China has continued to suppress the value of the renminbi, despite US pressure to allow it to rise, while countries ranging from Singapore to Colombia have issued warnings over the strength of their currencies. Calculated Risk concludes that Brazil “may be intervening soon”. Read more

The great race (to the bottom)

| Sep 23 2010 09:35 | Comment |

Some further thoughts on the topic du jour — competitive currency devaluation and the race to the bottom.

In the wake of Tuesday’s FOMC statement, RBS FX analyst Gregg Gibbs reckons the chance of a major meltdown on the currency markets is increasing as investors seek the relative safety of higher growth regions — or ones that are not dropping notes from helicopters: Read more

50:1 leverage lives!

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Aug 31 2010 15:08 | Comment |

A big H/T to Alea for this story, plus the title.

Late on Monday, the US Commodity Futures Trading Commission released its final foreign exchange market rule. The centrepiece is the limit on leverage for firms dealing in retail forex — the decision itself, following months of weighty deliberation. Read more

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