Currency

Trump’s tariffs put yuan shorters back in the game

14 May 2019

China's currency is nearing 7 per dollar, as U.S. duties hit $200 bln of goods. That may cushion the pain but encourages capital flight, hampering efforts to gin up a flagging economy. Beijing could well tighten controls on overseas investment and debt repayment to compensate.

Guest view: Halve Bank of Japan’s inflation target

26 Apr 2019

Consumer prices are rising more slowly than the central bank’s 2 percent goal. Aiming for 1 percent is acceptable in a country with a low jobless rate, Koichi Hamada, economic adviser to Prime Minister Shinzo Abe argues. Any resulting yen appreciation will be manageable.

Deutsche Boerse FX deal stretches financial limits

11 Apr 2019

The German stock exchange operator has confirmed negotiations to buy foreign exchange businesses from Refinitiv. CEO Theodor Weimer could afford to spend around 1.5 billion euros and stay within his debt target. A bigger outlay could mean shareholders stumping up.

Argentina’s Macri may yet survive his own policies

9 Apr 2019

The president’s support is sinking as the peso dives, inflation persists and poverty rises. Populist nemesis Cristina Fernandez wants to run in October elections, spooking investors. But Macri’s IMF-endorsed policies, even if softened, are likely to endure. He may yet do so too.

Twitchy sterling sends traders running for cover

3 Apr 2019

Speculative bets on the pound are at their lowest level since 2012. Little wonder given that Britain could crash out of the EU, postpone its departure, or cancel Brexit in the next few weeks. The first signs of clearer direction will trigger a huge move on the foreign exchanges.

Theresa May’s soft-Brexit pivot has three barriers

3 Apr 2019

The prime minister offered to strike a deal with the opposition Labour party to avoid crashing out of the EU. Its leader Jeremy Corbyn may refuse to help, her own party might revolt, and Europe could reject another extension. A chaotic Brexit is less likely, but still possible.

Turkey elections pave way for bad economic choices

1 Apr 2019

Setbacks that President Tayyip Erdogan suffered in local elections came after the economy tipped into recession. He will be all the keener on policies that will stimulate activity in the short run. Investors would prefer reforms to boost investment and may take fright again.

Turkey’s attack tactics are worst form of defence

27 Mar 2019

Ankara is making it harder to bet against the lira, but overnight swap rates of 700 pct also make hedging prohibitive. Probes by the bank watchdog mean a research drought. Investors will dump Turkish assets rather than stay exposed, especially when experts are opting to keep mum.

Resurgence of carry trades is riddled with risk

6 Mar 2019

Borrowing low-rate currencies to invest in higher-yielding ones is back in vogue. That’s because major central banks are deferring policy tightening and volatility is low. One or the other of these reasons may all too easily vanish, leaving followers of the trend high and dry.

Zimbabwe offers a way to test blockchain’s worth

5 Mar 2019

Even after a 60 pct devaluation, Harare’s monetary credibility is irreparably broken. That should make it an ideal test case for distributed ledgers replacing ropey central banks. Yet citizens’ justifiable distrust of the state doesn’t mean ceding monetary control is an easy fix.

The yuan belongs in a U.S.-China trade pact

1 Mar 2019

Washington might ask Beijing to formally pledge not to devalue its currency. China says a weaker yuan is not in its interests, which might be true. But past manipulation distorted the U.S. economy, and could happen again. A deal without a currency clause will be flawed.

Nigeria votes for another four years of drift

27 Feb 2019

Re-elected President Muhammadu Buhari faces a daunting to-do list. His first term suggests most of it will stay undone. Easing the state’s grip on the currency and oil sector could revive growth. That the former general’s main rival backed such reforms means neither is likely.

Zimbabwe’s devaluation is a missed opportunity

22 Feb 2019

Harare has conceded that its electronic “zollars” are worth 60 percent less than it had claimed. Yet black market valuations imply the currency is still overvalued. The moves could rile citizens without spurring the investment Zimbabwe sorely needs to fix its battered economy.

Franc gives West Africa good reason to like France

4 Feb 2019

Italy’s 5-Star says Paris is fuelling unemployment and migration by backing the region’s single currency. It’s true the 74-year-old franc keeps the zone’s 150 mln people oddly close to their old master. But its longevity proves the merits of stable prices over cheaper exports.

U.S. intervention in Venezuela carries retro risk

28 Jan 2019

Uncle Sam is sanctioning state oil firm PDVSA in a bid to spur regime change. President Maduro’s woeful record has united much of the hemisphere in demanding his ouster. But a U.S. history of regional meddling means the Trump administration must avoid arrogance to retain allies.

Venezuela’s Maduro caught in pincer movement

23 Jan 2019

Protesters are demanding the socialist leader’s ouster. Opposition leader Juan Guaidó has, with U.S. blessing, declared himself interim president. But a self-inflicted wound will get Maduro in the end: By tanking oil output, he robbed himself of a key means of clinging to power.

Markets point to way out of Brexit impasse

16 Jan 2019

Sterling rose and stocks were steady after Theresa May’s defeat in parliament, defying fears of a crash. Assuming the prime minister survives a confidence vote, a softer Brexit or second referendum become more likely. British politics looks messy, but investors’ message is clear.

Brexit defeat will begin process of elimination

15 Jan 2019

Britain’s parliament is set to reject Prime Minister Theresa May’s deal to leave the European Union. The vote will offer few pointers about which alternatives they prefer, but will force politicians to test other ideas. With 73 days to go, their options are rapidly shrinking.

Zimbabwe currency plan is doomed before delivery

14 Jan 2019

Robert Mugabe’s successor wants to ditch the U.S. dollar and introduce a new national money. Its value is bound to dive but any benefits will be fleeting unless Harare can also slash a bloated civil service and break its serial addiction to printing cash. That is unlikely.

Emerging Asia is primed for volatility

10 Jan 2019

The new year has brought hints of recovery to the region, thanks to weaker oil and hopes of a more dovish U.S. Fed. But slow growth, trade tensions and key polls in India, Indonesia and Thailand leave room for significant ructions in equity, credit and currency markets.