Currency

Forex is weakest link in UK market abuse crackdown

12 Jun 2014

Chancellor George Osborne is attacking manipulation of currencies, interest rates, and other assets. Wrongdoers face jail. The moves are sensible and other EU countries plan something similar. But there’s a big problem: still no global rules to tell FX traders what is acceptable.

Fine global monetary ideals clash with reality

17 Apr 2014

Central bankers want better bulwarks to protect emerging economies from sharp capital shifts - and to shrink the huge war chests of hard currency. The sentiments are worthy, but it looks like the high watermark of global cooperation in monetary policy passed a few years ago.

Draghi abandons threadbare G7 currency truce

15 Apr 2014

The ECB chief’s promise to ease policy if the euro rises makes him the latest to flout big developed countries’ agreement not to use exchange rates as an economic tool. Competitive devaluations are wars with few winners. But further currency conflict looks almost unavoidable.

Official attention will make or break bitcoin

31 Mar 2014

Scrutiny from tax authorities and regulators may deter off-the-grid types who like the digital money for its anonymity. Yet interest from investors and even creators of derivatives could start drawing bitcoin into the mainstream. Either way, its days in the shadows are over.

Scandal will reshape FX trading dynamics

11 Mar 2014

Probes into possible currency market manipulation will speed up industry change. The shift to electronic trading will be accelerated, squeezing banks’ trading profits. And with traders cagier about sharing juicy titbits on flows, exchange rates may start to move differently.

Who bails out bitcoin depositors?

25 Feb 2014

The pseudo-currency’s main exchange has disappeared from cyberspace, leaving customers at least temporarily bereft. Bitcoin’s supposed attraction is being government-free. When things go awry, users learn why conventional finance has expensive regulation and political backstops.

Markets at risk from new split in global economy

24 Feb 2014

“Decoupling” has turned upside down. Soft Chinese manufacturing, a weaker yuan, rising Indian interest rates and political unrest look ominous for emerging economies. Meanwhile U.S. data reassures and even the euro zone is a bit better. The mix looks bad for asset prices.  

Whole FX business belongs in the dock

18 Feb 2014

Some traders may have committed malpractice in the gigantic foreign exchange market, but the currency business itself has the hallmarks of an economic crime. It is much too big to serve any useful purpose. Its volatility is destabilising. And FX hedges are mostly pointless.

Currency wars pose disinflation risk for losers

17 Feb 2014

The dollar and the euro are rising against many currencies. It means that U.S. and euro zone exports are more expensive, and imports cheaper. They can absorb the trade hit. But with inflation already worryingly low, the downward pressure on prices might be harder to take. 

FX fines could hit European bank profit hard

7 Feb 2014

The UK’s financial regulator says foreign exchange manipulation could be as bad as the Libor scandal. If the fines are as big, that has serious financial implications. Libor settlements now stand at $5.8 bln – on average 15 pct of the affected banks’ forecast 2014 pretax profit.

Fear of currency busts stems from bungled booms

4 Feb 2014

Why are plunging currencies “crises” for developing nations when steep falls in the Aussie dollar or the yen are mere “adjustments”? Emerging markets’ financial fragility is the standard answer. But the phobia has its root in the countries’ failure to tame prices in good times.

Hugo Dixon: Independent Scotland won’t keep the pound

3 Feb 2014

The Scottish government wants to be part of a sterling zone if the people vote for independence, as alternatives to the pound aren’t attractive. But it’s hard to see the rest of the UK agreeing to such a deal – except on terms that would affront Scotland’s amour propre.

Turkey’s crisis is beyond central bank’s control

23 Jan 2014

After refusing to hike rates, the central bank is intervening in forex markets to try to stem the lira’s freefall. But Turkey’s problems require more drastic action. The economy’s structural faults and the ruling party’s erratic behaviour are at the heart of investors’ worries.

Edward Hadas: Bitcoin repeats gold-standard errors

22 Jan 2014

The popularity of the pseudo-currency is a sign of economic amnesia. If bitcoin - with limited supply and without government support - were the only currency, it would suffer from the problems of the old hard-money system. The result would be unnecessary panics and crises.

Edward Hadas: An early obituary for bitcoin

8 Jan 2014

Bitcoin mania is not over yet. But the pseudo-currency’s recent volatility is probably the start of its collapse. A retrospective would teach a lot about speculative fever, financial ignorance and the ease with which entrepreneurial time and energy can be wasted.

Dollar to give other currencies beating many want

30 Dec 2013

Currency market volatility will be pronounced in 2014. As the U.S. Fed cuts its asset purchases, the dollar looks set to climb from its current debased depths. The yen and the euro are keen to be beaten, emerging markets aren’t. The pound’s rise will rival the dollar’s.

Bitcoin mania heads into the end game

18 Dec 2013

The electronic pseudo-currency had a good run. Ideologues, speculators and scammers enjoyed it while it lasted. Now Chinese authorities are determined on a strict clamp down, maybe an outright ban. Common sense prevails. Bitcoin’s price is down 50 pct. It will fall much more.

FX increasingly slave to other markets’ moves

9 Dec 2013

Currencies have been especially tough to call in the past year. When global rates are so uniformly low, moves in the mammoth FX market seem to be a by-product of what’s happening in other, smaller, assets classes. That makes predictions almost impossible.

Deutsche ditch divines commoditized commodities

5 Dec 2013

The German bank is quitting energy and base metals trading. That should free up capital without hurting results. It’s a helpful step that others like Barclays and BNP Paribas may follow. It won’t, however, fully solve the bigger problem of a swoon making profits elusive for all.

Edward Hadas: Bitcoin is a step back not forward

27 Nov 2013

The web currency delights right-wing, anti-government economists. But private-sector money is a fantasy. Currencies need political authority; money matters are naturally the state’s responsibility. Bitcoin’s appeal has a lot to do with governments being bad monetary managers.