Currency

Japan’s inertia leaves yen at the mercy of the Fed

5 Oct 2023

It’s unclear if officials just intervened to stem currency losses but the debate ignores the bigger issue: The interest rate gap between the two countries will keep boosting the dollar. Unless Tokyo tightens policy, the US central bank will drive foreign exchange moves.

Erdogan’s orthodoxy creates new economic problems

13 Sep 2023

Turkey’s president finally ditched his love of low interest rates and pledged to curb inflation, currently at 59%. But Tayyip Erdogan still needs growth and will boost spending to get that. Soaring budget deficits and a weak currency will keep the economy under pressure.

Novo Nordisk heft worsens Danish surplus disease

8 Sep 2023

Sales of the pharma group equal 8% of Danish GDP and its $440 bln market value is Europe’s highest. Hosting corporate behemoths can be a problem for small countries, as shown by Finland’s Nokia. But Copenhagen can use the drug bounty to spend more on the rest of the economy.

China’s sliding currency is vote of no confidence

24 Aug 2023

The People’s Republic is scrambling to stop the yuan’s weakening against the US dollar. In this Viewsroom podcast, Breakingviews columnists discuss capital flight pressures and tepid investor interest in the world’s second largest economy, and what that means for the wider world.

Yuan slide half pulls Beijing out of its inertia

21 Aug 2023

It is scrambling to stop the currency’s slide against the US dollar but warning signs of diminishing returns on Chinese assets keep coming and will maintain capital flight pressure. The bill will be hefty the longer President Xi Jinping lets the economy search for a bottom.

Russia’s jumbo rate hike leaves Putin in hot water

15 Aug 2023

A plunge in the rouble and the Kremlin’s prodding forced the central bank to raise borrowing costs by 3.5 percentage points. The currency’s muted reaction leaves the president with more bad choices: restrict welfare spending or hope that even tighter policy can curb inflation.

The BRICS are better off disbanding than expanding

31 Jul 2023

Developing countries are understandably unhappy that rich nations don’t address their needs. But they won’t get much from a club including giant China and near-pariah Russia. Brazil, India and other emerging economies might achieve more by creating a new group, says Hugo Dixon.

Peak US interest rates will weaken dollar quicker

26 Jul 2023

The Fed’s latest hike should be the last, based on how investors are trading. Higher inflation elsewhere and slower increases by other monetary authorities suggest divergent policies will persist. Similar conditions that turbocharged the greenback are set to reverse thrust.

Russian crude imports expose India forex struggle

18 Jul 2023

The UAE is the Modi administration’s new target as it tries to make the rupee a global trading currency. Sanctions-hit Russia wasn’t keen, so refiners like Indian Oil have to settle deals with Moscow in yuan. New Delhi has yet to show it’s offering more than a speculative bet.

Capital Calls: Digital euro, Thames Water

28 Jun 2023

Concise views on global finance: Brussels is in a new push to convince EU member states and the European Parliament to endorse a digital euro; Britain’s Thames Water could be placed into special administration.

Crypto is dead: long live crypto!

16 Jun 2023

Already reeling from fraud and falling prices, cryptocurrencies suffered a fatal blow with US charges against two leading exchanges. Yet Felix Martin argues that the demise of speculative digital tokens may help revive their original purpose as private global currencies.

Erdogan part three would be worse and the same

18 May 2023

The Turkish president is in a heated battle to lead the battered country. In this Viewsroom podcast, Breakingviews columnists discuss the risks Turkey faces if he stays in office, his rival’s offering and how the outcome of the election will impact the rest of the world.

Digital “Chicago Plan” fixes many financial woes

28 Apr 2023

In the 1930s, economists drew up a radical blueprint to create safer banks. The advent of digital currencies issued by central banks is an opportunity to revisit the idea, writes Edward Chancellor. A shift could stabilise banking, reduce inflation, and even lower government debt.

Dollar bulls are praying for a mild downturn

26 Apr 2023

The greenback has lost 14% versus the euro since September, as investors bet on Europe’s recovery and China’s reopening. Inflation and interest rate trends still favour the single currency. The best hope for the buck is a minor economic slowdown to boost its safe haven status.

Sterling’s safe haven status will prove fleeting

6 Apr 2023

Investors have piled into the pound since the start of troubles at US banks, pushing it 5% higher against the dollar. Yet easing turmoil stateside will lead markets to fret more over UK issues: a probable recession, dire long-term growth, and a likely dovish central bank.

Why the dollar keeps winning in the global economy

28 Feb 2023

The greenback’s share of foreign exchange reserves is at 59%, a two-decade low. Challengers to its role as the world’s means of exchange abound. Yet the globalised financial system bolsters its lynchpin status. Absent major shifts in capital flows, the U.S. currency will thrive.

How investors can profit from Fed-ECB divergence

7 Feb 2023

As America flirts with a recession, the U.S. central bank is set to stop tightening as interest rates near 5%. That will leave ECB President Christine Lagarde as the West’s most hawkish policymaker. The transatlantic split is an opportunity for traders who bet on European assets.

Britcoin flags promise of cashless world, and risk

7 Feb 2023

The UK plans to make up for being a late e-money adopter by widening access to its digital currency plan. Right now banks are the main way to access physical cash, but online equivalents could be more widely distributed. The business of money could get messy.

Three carry trades for a new monetary policy era

27 Jan 2023

Central banks’ moves mean that investors borrowing money in yen and placing it in U.S. assets – a once-popular “carry trade” – are no longer onto a sure-fire winner. They can do better by shorting the euro and investing in Mexico, Brazil or Hungary.

Capital Calls: British jolt

17 Jan 2023

Concise views on global finance: The collapse of UK battery group Britishvolt leaves a gaping hole in the country’s auto manufacturing sector.