Archive for the ‘Central Banks’ Category

A currency war has started to take place in Eastern Africa, after South Sudan launches a new currency, South Sudan Pounds. The North Sudan’s central bank also launched a new currency shortly after, in an attempt to freeze money held by the South Sudan (more…)

IMF recently told the press they fail to see any underlying fundamental factors giving the Yen any strength. According to International Monetary Fund, the current value of the Yen reflects long-term fundamentals. So basically, they mean that the Yen is still overvalued against USD and rest of the G7 countries.

Surprising G7 intervention against Yen

Last week, seven central banks from the G7 countries joined together in an effort to weaken the Yen. After the earthquake, the Japanese Yen has been traded stronger, in contrast to what you would expect.

Currency traders also claim that the Yen strengths is partly due to corporations, insurance firms and private people sending money back to Japan.

What do investors buy in Japan right now?

It seems like Japanese investors mainly focus on the (more…)

South Korea sought had some problems with speculative currency inflows the latest year, making the local currency to spike. Now, an investigations of the major banks and their forex positions will start, according to Korean Ministry of Strategy and Finance.

What kind of forex trading will be investigated?

We will put our focus on forex forwards, forex futures and forex derivate instruments. No investigation will be made for online forex trading, according to the South Korean ministry.

Purpose of the investigation?

The investigation aim to prevent excessive short term foreign currency loans, and offshore borrowing. South Korea is the 4th largest economy in Asia, and excessive capital inflow may lead to financial instability and slower recovery from the economic slowdown (more…)

As we previously predicted it became inevitable for Bank of Japan (BOJ) to hold back its plans for intervention. JPY/USD went from 83 yen per dollar to 85.47 shortly after the intervention.

Strong yen – harmful for Japanese economy says Noda

Early this morning (9:30 ET) Yen reached a new 15-year high. This time, Bank of Japan was quick to intervene in the currency markets, selling yen in exchange for us dollars, after a week of possible intervention warnings. This intervention was made to counter the adverse impact of the strong yen, and was the first official intervention in the currency market since 2004.

“We conducted the intervention in order to avoid excessive movement in the currency market. The Bank of Japan will continue to (more…)

The yen surged to 15-year low on Friday against the dollar as fading confidence for the global economy have risen demand for the Japanese currency.

Will Bank of Japan intervene?

The latest move raised currency speculation of the Japanese central bank intervening in the forex market, which is rather uncommon (more…)

RBA, The Reserve Bank of Australia, decided on Tuesday to keep the interest rates unchanged for the third month in a row. We continue to see strong numbers for Australian employment and growth, and expect AUD to continue being strong against the USD with many carry traders moving to the pair (USD/AUD).

Strong growth among Australia’s trading partners

Economic data for the June quarter indicate strong growth, around 6 %, for Australia’s major trading partners. China, Japan and Korea had a stronger growth than expected, while the US economy grows less than expected.

Economic conditions in Australia

First, the Australian labour market has continued to show more jobs, while employment increased by over 46 000 jobs in June, growing 3.25 % since (more…)

Nationalbanken, Denmark’s centralbank, released info about their currency reserve yesterday. And it’s clear that there have not been much action by the Danish centralbank.

It apprears the currency reserve descreased 2.2 million DKK to 438.4 million DKK. The new balance is a result of sold Danish currency for 1 million DKK and a foreign loan for 1.2 million DKK.

There was no interventions by the Nationalbank in June.

Norges Bank made an official statement regarding fx purchases in July. They promised to not purchase any foreign currency in the current month.

They are otherwise one of the usual suspect for large transactions in foreign currency, especially when considerable amounts of petroleum are sold from Norway. The monthly allocations are determined by The Ministry of Finance every month.

The Norwegian Krone has strengthen from 9.15 to 8 for one Euro the latest year. Many currency analysts expect the NOK to rise even further.

Vladimir Putin seek to cut the percentage of foreign currency loans more then 50 %. He imposed new tax breaks with reductions for local loans compared to foreign loans.

Russian Debt levels

Russian companies have $294 billion of international and 12.8 trillion rubles ($410.8 billion) of local loans, according to Bank of Russia.

Lower inflation and borrowing costs

The interest rate has been cut 14 times in Russia the last year, to 7.75 % in July. At the same time, inflation gone down drastically from over 10 % to 5.8 % in June. (more…)