Currency Newswire » Central Banks

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

admin — Sat, 02 Apr 2011 20:28:11 +0000

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, two weeks after the bankruptcy of Lehman Brothers Holdings Inc., according to documents released yesterday. The collateral backed $155.7 billion in loans on the largest day of borrowing from the Primary Dealer Credit Facility, which was created in March 2008 to provide loans to brokers as Bear Stearns Cos. collapsed.

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Vietnam Raises Rates

admin — Sat, 02 Apr 2011 20:23:10 +0000

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 told Dow Jones Newswires. It last raised that rate March 8, to 12% from 11%. It also raised the repurchase rate, likewise to 13% from 12%.

The bank kept its benchmark rate unchanged at 9%, where it has been since November, and the rediscount rate at 12%, after raising it from 7% last month.

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China Yuan Hits Fresh High

admin — Sat, 02 Apr 2011 20:21:09 +0000

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 in inflation in March was likely the reason Beijing allowed the yuan to strengthen.

On the over-the-counter market, the dollar was at CNY6.5479 around 0830 GMT, down from CNY6.5485 late Thursday. It traded between CNY6.5452, its lowest level since 2005, and CNY6.5503.

China to Further Expand Cross-Border Renminbi Business

admin — Sat, 02 Apr 2011 20:18:53 +0000

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 while summarizing China’s achievements in promoting cross-border renminbi business over the course of China’s 11th Five-Year Plan.

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Taiwan Central Bank Raises Key Interest Rate

admin — Sat, 02 Apr 2011 20:15:45 +0000

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.

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Rep. Paul Planning Hearing on Fed Foreign Lending

admin — Sat, 02 Apr 2011 20:13:25 +0000

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.

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ECB’s Trichet is Bond Buyer of Only Resort

admin — Fri, 12 Nov 2010 04:32:36 +0000

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 bonds from spreading. That may require him to ignore opposition from Bundesbank President Axel Weber to the ECB’s bond-buying program and expand purchases of sovereign assets, according to Citigroup Inc. and Royal Bank of Scotland Group Plc.

The pressure on the Frankfurt-based ECB reflects its status as the only institution in the 27-nation European Union able to act fast enough to placate bondholders. The premium investors charge to hold Irish and Portuguese debt over German bunds reached records yesterday and the euro fell almost 2 cents to $1.3637.

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

admin — Fri, 12 Nov 2010 04:30:12 +0000

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 of China and Agricultural Bank of China (ABC) — will stand at 18 percent once the rise takes effect.

The move will take the deposit reserve ratio for other large financial institutions to 17.5 percent and that for small- and medium-sized ones to 14 percent.

Peru Central Bank Leaves Reference Rate Unchanged

admin — Fri, 12 Nov 2010 04:26:33 +0000

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 and factors that determine inflation.

The directors said Peru’s weak inflation allows it to continue to take a pause in the preventive increases in the reference rate that started in May this year. The central bank added that some supply issues that drove up inflationary pressures have been reduced.

Brazil Central Bank to Act on Inflation if Needed

admin — Fri, 12 Nov 2010 04:24:19 +0000

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 on price indexes, but said the bank was closely monitoring those and other pressures.

“The central bank will take adequate measures to keep inflation on target,” he said.

Brazil has set year-end targets for its IPCA consumer price index, the country’s main measure of inflation, at 4.5% for 2010 and 2011.

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

admin — Wed, 10 Nov 2010 05:41:10 +0000

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 markets. Governments in Asia and Latin America, alarmed about currency appreciation, have vowed more steps against the foreign capital flooding their countries.

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

admin — Wed, 10 Nov 2010 05:38:13 +0000

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, ruling party lawmaker Kim Song Sik said in an interview in Seoul yesterday. Asian economies may need to take measures as monetary easing in the U.S. threatens to spur asset bubbles in the region’s stock, currency and property markets, World Bank Managing Director Sri Mulyani Indrawati said this week.

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Convertible Bonds Leading Market Amid Gains in Yuan

admin — Wed, 10 Nov 2010 01:09:14 +0000

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 the end of September, while the Shanghai Composite Index of shares surged 18 percent. The yuan jumped yesterday the most since a dollar peg ended in July 2005 on speculation faster appreciation will be tolerated before Group of 20 leaders meet this week in Seoul.

The fastest growth among the world’s major economies is helping attract funds, with the Shanghai index posting the biggest gain in Asia the past month and the yuan advancing.

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Yuan Approaches Highest Level Since 1993

admin — Wed, 10 Nov 2010 01:06:58 +0000

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 2005. It touched 6.6420 earlier, compared with 6.6404 on Oct. 15, the highest level since the central bank unified official and market exchange rates 17 years ago.

The appreciation came two days before the summit of the G- 20 leaders who are seeking to avert a worldwide “currency war” and address global imbalances in consumption and exports.

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Is China’s Renminbi Already the New Reserve Currency?

admin — Tue, 09 Nov 2010 18:38:20 +0000

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 and more in the world are starting to look at the CNY as the new reserve currency. And as we pointed out earlier, its fixing surge of over 0.5% overnight caused many to blink. Is China finally pushing to aggressively force the dollar out?

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China’s Dagong Downgrades U.S. Credit Rating

admin — Tue, 09 Nov 2010 18:32:46 +0000

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 to repay debt, Dagong said, as cited by the state-controlled news agency. The Fed’s quantitative easing policy will erode the value of the dollar and is against the interests of creditors, the company said.

China Says G20 Should Monitor US Fed

admin — Tue, 09 Nov 2010 18:01:02 +0000

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 an extra $US600 billion ($A593.65 billion) buying Treasury bonds to stimulate the US economy.

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

admin — Tue, 09 Nov 2010 17:58:26 +0000

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 Englander, global head of currency strategy at Citigroup in New York, wrote in a research report today.

Vietnam Central Bank Raises Benchmark Rate

admin — Mon, 08 Nov 2010 17:26:25 +0000

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 its first boost to the benchmark since December. The refinancing rate will rise to 9 percent from 8 percent, while the discount rate rises the same amount, to 7 percent.

Vietnam’s inflation rate was 9.66 percent in October, holding above 8 percent for the ninth consecutive month and exceeding the government’s target for this year. Asianomics Ltd. economist Jim Walker told investors at a Ho Chi Minh City conference last week that Vietnam’s government had to “get its act together on interest rates” by boosting lending costs and slowing growth.

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Spanish Economy Stalls in Third Quarter

admin — Mon, 08 Nov 2010 17:21:56 +0000

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 period, it estimated in its latest monthly bulletin.