Fed’s Rules Let Brokers Turn Junk Into Cash at Height of Financial Crisis

At the height of the financial crisis, the Federal Reserve allowed the world’s largest banks to turn more than $118 billion in junk bonds, defaulted debt, securities of unknown ratings and stocks into cash. Collateral of those asset types made up 72 percent of the total $164.3 billion in market-rate securities pledged to the Fed on Sept. 29, 2008,... Read more...

Vietnam Raises Rates

Vietnam’s central bank raised two interest rates Friday, another step in the government’s new campaign against inflation and economic imbalances. The State Bank of Vietnam raised the recapitalizing rate—charged on its loans to commercial banks—to 13% from 12%, an official with the central bank’s department of monetary policy management... Read more...

China Yuan Hits Fresh High

China’s yuan rose to its highest level against the U.S. dollar under the current system late Friday after the central bank set another record-low dollar/yuan central parity rate. Dealers said the spotlight on the yuan at an informal meeting of finance ministers from the Group of 20 industrial and developed nations and expectations of a pickup... Read more...

China to Further Expand Cross-Border Renminbi Business

China will enhance the renminbi’s role in cross-border trade and investment over the next five years, since country has witnessed progress in internationalizing the currency, an official with the country’s central bank said Saturday. Li Bo, director of the Monetary Policy Bureau of the People’s Bank of China (PBOC), made the remarks... Read more...

Taiwan Central Bank Raises Key Interest Rate

Taiwan raised its key interest rate for the fourth time in nine months in a bid to combat inflation. The island’s central bank Thursday raised the benchmark interest rate by 0.125 percentage point to 1.75 percent, saying the move will help stabilize Taiwan’s consumer prices and financial markets. Read more…  Read More →

Rep. Paul Planning Hearing on Fed Foreign Lending

Persistent Federal Reserve critic Representative Ron Paul plans to hold a hearing on the U.S. central bank’s emergency loans to the branches of non-U.S. banks, his spokeswoman said on Saturday. “I was surprised and deeply disturbed … to learn the staggering amount of money that went to foreign banks,” Paul said in a statement. Read... Read more...

ECB’s Trichet is Bond Buyer of Only Resort

European Central Bank President Jean-Claude Trichet is the buyer of only resort as the euro area’s bond market melts down. Just six months after he threw out his rule book to prevent Greece’s debt crisis from splintering the euro area, the 67-year old Frenchman may again be the only policy maker able to prevent the collapse in Irish and Portuguese... Read more...

China to Raise Banks’ Reserve Requirement Ratio by 50 Basis Points

The People’s Bank of China (PBOC), China’s central bank, said Wednesday it will raise the deposit reserve requirement ratio (RRR) for Chinese deposit-taking financial institutions by 50 basis points from Nov. 16. The RRR for the four big state-owned banks — the Industrial and Commercial Bank of China, China Construction Bank, Bank... Read more...

Peru Central Bank Leaves Reference Rate Unchanged

The Central Reserve Bank of Peru Thursday left its key reference interest rate unchanged at 3.0%. Economists had expected the central bank to leave its policy rate unchanged, given weak inflationary pressures in Peru. In a statement, the central bank’s board of directors said that its decision takes into account the recent movements in inflation... Read more...

Brazil Central Bank to Act on Inflation if Needed

Brazil’s central bank is prepared to take rate-policy action if necessary to maintain inflation in line with official targets, Central Bank President Henrique Meirelles said Thursday. Speaking at a hearing of the country’s congressional joint budget committee, Meirelles admitted that food prices have recently brought significant pressure... Read more...

Taiwan, Philippine Moves Latest in Asia’s Hot Money War

Taiwan on Tuesday slapped a cap on bond investments by foreigners while traders in Philippines said the central bank had exacerbated a local dollar shortage, highlighting Asian policymakers’ worries about foreign capital inflows. A new round of quantitative easing in the United States has raised fears of a pickup in hot money flows into emerging... Read more...

Korea’s Won Near One-Week Low on Concern Over Capital Controls

South Korea’s won traded near a one- week low on concern the government will follow neighbors China and Taiwan in imposing capital controls to curb inflows as the U.S. pumps more funds into its economy. South Korea may revive a 14 percent tax on treasury and central bank bonds held by foreigners as early as January to temper foreign-exchange volatility,... Read more...

Convertible Bonds Leading Market Amid Gains in Yuan

China’s convertible debt is outperforming the rest of the bond market, rising 11 percent this quarter, as stocks rally and the yuan strengthens. The S&P China Convertible Bond Index gained 2.9 percent this month and 8.3 percent in October, the most in a year. Benchmark measures tracking conventional corporate and government notes declined since... Read more...

Yuan Approaches Highest Level Since 1993

China’s yuan is approaching the strongest level against the dollar since 1993 on speculation the country’s central bank will permit faster appreciation before Group of 20 leaders meet this week in Seoul. The yuan gained 0.51 percent to 6.6440 per dollar yesterday in its biggest daily advance since China abandoned a peg against the greenback in July... Read more...

Is China’s Renminbi Already the New Reserve Currency?

With the dollar tumbling overnight, many were scratching their heads as to what caused the move in the dollar. Citi’s Stephen Englander provides a useful explanation, which fits perfectly with the commentary from PBoC advisor Li’s earlier that the dollar’s position as a reserve currency is now “absurd”: namely that more... Read more...

China’s Dagong Downgrades U.S. Credit Rating

China’s Dagong Global Credit Rating Co. cut its credit rating for the U.S. to A+ from AA because of a Federal Reserve plan to purchase bonds to spur growth and inflation, according to Xinhua News Agency. The credit outlook for the U.S. is negative amid deteriorating debt repayment capability and a “drastic” drop in the government’s intention... Read more...

China Says G20 Should Monitor US Fed

China’s state media has issued a new broadside at the US Federal Reserve’s move to prime the US economy, suggesting the Group of 20 should monitor policy shifts by the US central bank. The Xinhua news agency said in a commentary the Fed was “risking the global recovery by following its own track for economic revival” by spending... Read more...

Citigroup Rule Model Says Central Banks May Sell U.S. Dollars This Month

Central bank reserve managers may be net sellers of U.S. dollars this month after the conditions activating a trading rule were met, Citigroup Inc. said. The dollar fell last month; reserve managers increased their currency holdings, on a valuation-adjusted basis, and by more than the previous month, meaning dollar sales are likely in November, Steven... Read more...

Vietnam Central Bank Raises Benchmark Rate

Vietnam raised interest rates for the first time in almost a year after inflation accelerated to a 19-month high last month, joining regional counterparts from Malaysia to Thailand that have raised borrowing costs this year. The so-called base rate increases to 9 percent today, the State Bank of Vietnam said in a statement on its website, announcing... Read more...

Spanish Economy Stalls in Third Quarter

The Spanish economy stalled in the third quarter when deep government spending cuts intended to slash a ballooning public deficit hurt a fledgling recovery, the Bank of Spain said on Friday. Spain’s gross domestic product was unchanged in the third quarter from output in the previous three months and was up by 0.2 percent from the same year-ago... Read more...

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