Currency

FX flash crash has ominous overtones

3 Jan 2019

A range of currencies slumped against the yen. There have been other short sharp shocks in the past in a market where daily turnover tops $5 trillion. But this time the gyrations were more widespread. Changes to the way banks behave mean sudden lurches will be more frequent.

Ghosts of Argentine past will come for Macri’s job

26 Dec 2018

The pro-business president has had to seek IMF help as he tries to steer Latin America’s No. 3 economy to health. That’s a gift to his discredited Peronist opponents. Recovery from drought and currency collapse may come too late to prevent the return of the spendthrifts of yore.

Watch UK bonds to see when there’s a real crisis

16 Nov 2018

The pound suffers every time concern flares that Britain may crash out of the European Union. But gilts strengthen since bleaker economic prospects make higher interest rates less likely. The clearest sign investors have had enough would be when both weaken at the same time.

China’s abused offshore yuan is scarred for life

8 Nov 2018

As the currency nears 7 to the dollar, its weakest since 2008, officials are attacking short-sellers exploiting gaps in overseas derivatives trade. Beijing is trying to run two exchange rate regimes. A muddled strategy is making an already difficult balance unsustainable.

U.S. Treasury hasn’t yet been Trumped

17 Oct 2018

China again escaped being named a currency manipulator by the U.S. agency, despite pressure from the president. Although some trade-related penalties are already happening through other means, it’s a rational decision. Steady hands at Treasury and the Fed offer investors comfort.

Zimbabwe’s soaring stocks are a disaster signal

12 Oct 2018

Harare’s bourse leapt 66 percent this week even as global equities sagged. That reflects crumbling faith in cash and banks rather than confidence in the economy. The southern African country is in such a sorry state that shares are a rare source of sanctuary.

Italy botches useful fiscal boost

5 Oct 2018

The radical government wants to ramp up spending in defiance of Europe’s fiscal rules. The country could use a stimulus but the case is being undermined by rosy growth forecasts and inflammatory rhetoric from Rome. That spells more tensions with Brussels and bond markets.

Speedier FX markets offer muddier signals

17 Sep 2018

Electronic trading and automation has made the foreign exchanges even zippier, a BIS report says. That has both increased fragmentation in the $5-trillion-a-day currency market and given more clout to the biggest banks. Knowing who is doing what and why is even harder to discern.

Latam can exorcise returning decades-old demons

12 Sep 2018

Argentina’s peso crisis and the stabbing of a far-right candidate in Brazil echo the region’s past economic instability and political violence. Mexico’s oil industry, too, may revisit the 1970s; Venezuela is in a totalitarian time warp. But history doesn’t have to repeat.

China’s yuan support scaffolds its developers too

31 Aug 2018

Real estate firms like Evergrande are sitting on some $120 bln in offshore dollar debt, nearly double 2016 levels. That’s a worry as the yuan weakens, raising costs. Beijing's latest efforts to slow the currency’s decline, though, has bought a critical sector some time.

Virtuous Macri circle turns vicious for Argentina

30 Aug 2018

The pro-market leader of Latin America’s No. 3 economy has been laying the basis for long-term prosperity. But inflation, drought and soured investor sentiment threaten his efforts. A new run on the peso, and desperate rate hikes, make a return of his Peronist nemeses more likely.

Consumer giants have bigger problems than Turkey

28 Aug 2018

Unilever and Nestlé can resist a crisis in Turkey, which accounts for little of their revenue. But both will suffer if troubles spread across emerging markets, which account for about half of group sales. All the more so since Western shoppers are unlikely to take up the slack.

South Africa has thin defense against Trump thump

24 Aug 2018

The U.S. president’s complaint about the killing of white farmers didn’t much rattle markets, but South Africa’s trade-dependent economy can’t afford a fight with the White House. The only comfort: leader Cyril Ramaphosa is more business-friendly than his ousted predecessor.

Anti-dollar push can fly in Beijing but not Berlin

24 Aug 2018

Germany’s foreign minister wants a payments system that’s independent of the United States. Europe will struggle to set it up given close transatlantic economic and financial ties. China is better placed and could demand that all who want to access its economy use an alternative.

Britain can limit no-deal Brexit currency crisis

23 Aug 2018

The UK is publishing contingency plans for a no-deal EU exit. Its unspoken parachute, however, is Britain’s vast pile of overseas assets, which cushion a sterling crash and calm solvency fears. The bad news is that the impact on the City of London could erode that defence.

Venezuela’s Maduro rearranges economy’s deckchairs

20 Aug 2018

The president’s plan to devalue the bolivar, peg it to an obscure state-backed cryptocurrency and raise the minimum wage will widen the already gaping hole in the OPEC member’s finances. Promised fuel-price hikes, if botched, could send his socialist government to the seabed.

Capital retreat turns light on Turkey lookalikes

17 Aug 2018

Other emerging economies also have lots of foreign currency debt or inadequate FX reserves. Some, such as South Africa and Argentina, are already hurting. Breakingviews ranks the countries that look the most vulnerable as flows to riskier markets go into reverse.

Viewsroom: Turkey’s financial crisis may spread

16 Aug 2018

The feud between President Tayyip Erdogan and U.S. President Donald Trump over steel tariffs threatens to turn other emerging markets cold. Breakingviews columnists discuss the global impact of Turkey’s currency meltdown. Plus: A bad bank in China gets whacked by political risk.

Putin has strong defences against U.S. debt siege

15 Aug 2018

The rouble has slumped on fears that Russia’s sovereign bonds will be next in the crosshairs of U.S. sanctions. That would cause a stink, but the bill may not pass into legislation. If it does, oil prices and Moscow’s low debt mean President Vladimir Putin can weather a crisis.

Hadas: Turkey shows damage of fading world order

14 Aug 2018

The country and its foreign creditors have had an irresponsible relationship for decades. The latest crisis is different because one-time supporters like the U.S., EU and IMF are less willing to help, and there are no credible replacements. Prepare for more currency crises.