Currency

Hadas: This should be an anti-dollar moment

13 Jun 2018

Discontent with the world’s dominant currency is not new, but the Trump effect is something new. A trade circuit free from the U.S. president’s idiosyncratic America-first policies is urgently needed. The euro and renminbi can provide a base, but the politics are unpromising.

Exclusive: “Quitaly clause” marks new risk level

8 Jun 2018

As Rome fumbles its single-currency bona fides, global investors are taking steps to protect themselves. In a possible legal first, lawyers added language to a share purchase deal to guard against Italy leaving the euro zone, “voluntarily or by means of expulsion”.

Switzerland’s safe money vote is flawed but useful

6 Jun 2018

Giving the central bank a monopoly over electronic cash will not end financial crises or taxpayer bailouts, as campaigners claim. It also muddles monetary policy. However, the upcoming referendum has forced a public debate about the purpose of commercial banks. That’s overdue.

Hedge funds are unwitting crisis altruists

5 Jun 2018

It was they, not banks or asset managers, who set the Mexican peso’s level after the 2016 U.S. election and the pound’s after Brexit, a new study finds. The irony is hedge-fund returns have remained mediocre. It suggests price discovery is a social service more than a business.

Hadas: Market complacency curses debtor countries

31 May 2018

President Erdogan is wrong to claim a sinister “interest rate lobby” has aggravated Turkey’s structural weaknesses. Foolish foreigners have, however, financed unsustainable consumption binges in this and other economies. Remedies range from regulatory nudges to capital controls.

Mario Draghi may help more in Rome than Frankfurt

31 May 2018

Turmoil in his native Italy threatens the European Central Bank chief’s biggest triumph: saving the single currency. A eurosceptic government would weaken his promise to do “whatever it takes”. He might have more success challenging opponents of the euro as a domestic politician.

How the EU can help save Italy from itself

31 May 2018

A new radical government will cast doubt over euro membership and inflame migration tensions. Other EU countries could help ease voter discontent by tweaking the bloc’s fiscal rules, and taking more migrants. That won’t be easy, but it beats Italy leaving the single currency.

Dollar rally comes at exquisitely awkward time

30 May 2018

The greenback's recent strength creates a policy headache. If sustained, it’ll reheat real estate, pull capital from emerging markets and complicate Trump's attempts to push U.S. exports. And it’ll buttress the currency’s dominance despite rising doubts about the U.S. government.

Only Italy can save itself from self-inflicted woe

29 May 2018

Investors are spooked by the prospect of a eurosceptic government pushing up debt, prompting an exit from the single currency. Contrary to 2011, Italy is the cause of the crisis, rather than a victim. A change of direction depends on voters, not the European Central Bank.

Turkey’s FX rot demands radical measures

23 May 2018

A massive one-off rate rise is the least it will take to halt the lira’s accelerating slide to new record lows against the dollar. Even then, investors might still fear President Tayyip Erdogan’s monetary policy meddling. Capital controls would then grow more likely.

Indonesia picks market stability over growth

17 May 2018

Agus Martowardojo is ending his term as central bank governor the same way he began: with a rate hike. The falling rupiah forced him to move earlier than planned. Southeast Asia's largest economy will splutter as a result, but delaying action would have had graver consequences.

EU transparency purge may boost bitcoin legitimacy

14 May 2018

The European Union will force exchanges to identify users who trade in cryptocurrencies. That could make it harder for criminals to use them to hide ill-gotten gains. The clampdown might deter some traders, but should make virtual currencies more respectable.

Kodak’s lost crypto moment mirrors its decline

10 May 2018

The imaging firm’s partner aims to raise $50 mln in a coin offering to develop a photographic-rights platform. Kodak stock popped over 300 pct when it unveiled the plan in January but it has since lost most of that ground. The ICO hype has faded even faster than film photos did.

Japan’s carmakers brace for fanciful currency ride

7 May 2018

Honda reckons FX moves could lop nearly $2 bln off earnings this year. If the yen rises, automakers often suffer, as does much of Japan Inc. The $60 bln maker of the Accord typically errs on the side of caution, though. And a truly painful exchange rate is unlikely.

Nigeria’s FX reserve fetish is bad for growth

30 Apr 2018

President Muhammadu Buhari is vaunting a rapid rise in foreign exchange reserves. A decent war chest is worth having in case the naira needs defending. But accumulating a vast pile of dollars will deprive the economy of the hard currency it needs to keep growing and create jobs.

Swiss central bank gets FX wish three years late

20 Apr 2018

The franc has weakened to 1.20 against the euro for the first time since the Swiss National Bank ditched its cap on the currency in January 2015. Several factors could explain why. Policymakers are unlikely to care much about the reasons given the moves may help revive inflation.

China’s surprise reserve cut exposes growth angst

17 Apr 2018

The central bank cut reserve requirements for banks, freeing $200 bln for lending. That backs up other moves to help over-stretched banks amidst a purge on loose credit. The timing, however, suggests Beijing is looking for a cushion if the economy slows, or a trade war escalates.

Hong Kong’s dollar peg looks durable

13 Apr 2018

The monetary authority stepped in to prop up the local currency, the first such intervention under a system that dates to 2005. Long term, the territory will probably ditch its tie to the U.S. dollar and track the yuan instead. But the peg faces no serious threat for now.

Watch Singapore rate decision for trade war signal

12 Apr 2018

As one of the world’s most open economies, the city-state is caught in U.S.-China crossfire. Domestic growth is strong enough to encourage the central bank to tighten policy on Friday. A decision to stay neutral will hint at the damage that rate-setters expect tariffs to inflict.

Review: The ultimate truth about blockchain

6 Apr 2018

The technology behind bitcoin has applications that extend far beyond the crypto-currency hype. But is it the panacea for humanity’s problems? “The Truth Machine” takes a positive view of decentralised digital ledgers, but underplays fundamental questions of safety and trust.