Currency Newswire

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.

Read more about the Fed…

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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Silver Price Suppression

admin — Sat, 02 Apr 2011 20:10:01 +0000

This paper is written as a response to market observers who opine, “how can the price of precious metals be suppressed when their prices have empirically gone up 4 fold and more over the past 10 years?”

When we juxtapose Q3/2010 precious metals aggregates against Q4/2010 – we can see that J.P. Morgue and HSBC cumulatively added roughly 4 billion in silver derivatives. We know these institutions are “short” because the Commitment of Traders Report [COTS] published weekly by the CFTC have perpetually shown the “Commercials” category to be short. J.P. Morgue and HSBC are “Commercials”.

Read more about silver suppression…

JPMorgan’s Dimon slams CFTC on Swaps Crackdown

admin — Sat, 02 Apr 2011 20:00:12 +0000

Jamie Dimon, chief executive of Wall Street giant JPMorgan Chase, lashed out at efforts by U.S. regulators to police the $600 trillion swaps market, in which his bank is a big player.

New regulations being implemented by the U.S. Commodity Futures Trading Commission, mandated under 2010′s Dodd-Frank Wall Street reforms, “would damage America,” Dimon said Wednesday at a U.S. Chamber of Commerce event on capital markets.

He was upbeat about the economy, but criticized aspects of the sweeping Dodd-Frank law.

Chinese Sub Pops Up in Middle of U.S. Navy Exercise

admin — Fri, 12 Nov 2010 07:13:44 +0000

When the U.S. Navy deploys a battle fleet on exercises, it takes the security of its aircraft carriers very seriously indeed.

At least a dozen warships provide a physical guard while the technical wizardry of the world’s only military superpower offers an invisible shield to detect and deter any intruders.

That is the theory. Or, rather, was the theory.

American military chiefs have been left dumbstruck by an undetected Chinese submarine popping up at the heart of a recent Pacific exercise and close to the vast U.S.S. Kitty Hawk – a 1,000ft supercarrier with 4,500 personnel on board.

By the time it surfaced the 160ft Song Class diesel-electric attack submarine is understood to have sailed within viable range for launching torpedoes or missiles at the carrier.

According to senior Nato officials the incident caused consternation in the U.S. Navy.

Read more about the Chinese sub…

CFTC Proposes Open Swaps Clearing for Small Banks

admin — Fri, 12 Nov 2010 05:01:29 +0000

The Commodity Futures Trading Commission approved a proposed rule to force the world’s largest banks to offer swaps clearing services to smaller firms, a change that would promote competition in the $615 trillion market.

The proposed rule comes after an industry group of more than 20 mid-size brokers such as Jefferies & Co., Imperial Capital LLC and Newedge USA LLC told regulators they’ve been denied access to swaps clearing because dealers want to keep the market to themselves. Current rules favor larger banks such as JPMorgan Chase & Co. and Deutsche Bank AG that have more capital and expertise to be clearinghouse members.

“Swaps dealers or major swaps participants are prohibited from interfering with or attempting to influence decisions related to the provision of clearing or the acceptance of clearing customers,” according to the proposed rule. The potential regulation now enters a 60-day public comment period before any final CFTC vote.

Read more about swaps clearing…

MBIA Reports $213 Million Third-Quarter Net Loss on Derivatives Contracts

admin — Fri, 12 Nov 2010 04:57:39 +0000

MBIA Inc., the bond insurer seeking to jumpstart its business of guaranteeing municipal debt, reported a $213 million net loss in the third quarter on a change in the value of derivatives contracts that reduced an accounting benefit.

The loss of $1.06 a share in the three months ended in September narrowed from $728 million, or $3.50 a share a year earlier, according to a statement today. Excluding the change in the value of derivatives, the company had an adjusted pretax loss of $68 million as the company increased its expectations for losses on guarantees of collateralized debt obligations and commercial-mortgage securities.

Armonk, New York-based MBIA was shut out of the bond guarantee business after being stripped of its top insurance ratings in June 2008 because of losses on mortgage-linked debt it insured. Chief Executive Officer Jay Brown is seeking to start insuring city and state debt again by separating the company’s municipal and structured-finance businesses.

Read more about MBIA…

Chi-East Dark Pool Marks Test Case For Asia

admin — Fri, 12 Nov 2010 04:54:04 +0000

The launch today of a pan-Asian independent dark pool represents an important test case for the region, according to market watchers, as European trading venues and broker-dealers look east for expansion opportunities.

Chi-East, a joint venture between Chi-X Global and the Singapore Stock Exchange, took the equities market by storm when it was unveiled in August 2009 as the first pan-Asian independent dark pool to be backed by a regional exchange.

Many overseas brokers including Instinet, ITG, Morgan Stanley, Credit Suisse, Citigroup and BNP Paribas, operate Asian crossing networks, or dark pools, in which they match up client order flow away from the public markets, but Chi-East is the first independent–or non-broker sponsored–alternative dark pool to go live in the region.

Chi-East is widely regarded as a landmark in the development of the Asian equities markets, which are experiencing their first wave of alternative liquidity and competition–a phenomenon that has already transformed both the U.S. and European markets.

Read more about Chi-East…

USD/JPY Aiming Higher

admin — Fri, 12 Nov 2010 04:50:44 +0000

The Dollar extended its gains against the Japanese yen, yet the upside remained limited below the Wednesday high, with the pair still struggling with the daily descendant trend line coming from 92.88, June 4th daily high. The hourly chart shows price firm above a slightly bullish 20 SMA acting as dynamic support, while bigger time frames hold its bullish tone.

The Daily Forecaster: GBP/USD

admin — Fri, 12 Nov 2010 04:46:48 +0000

There’s still a risk of seeing 1.6069 but while it holds the outlook is bullish otherwise expect losses

The underlying MT direction is bullish while the daily bias is bullish. Therefore the main risk is higher. Ensure that key support levels hold. Note key resistance levels that would suggest continuation of the bullish move. Consider confirming this with a bullish set up pattern in price or an indicator. Only consider a possible larger reversal lower should key MT support break and is supported by a bearish set up in price or an indicator

Consider buy set ups at: 1.6069-81

Consider sell set ups at: 1.6060 or 1.6254-94

EUR/USD Falls to 1.3600

admin — Fri, 12 Nov 2010 04:44:00 +0000

The Euro continued losing ground against the US Dollar on Friday, favoring further speculative flows into the pair, as the price just landed on a new 5-week low at 1.3601. The current price rebounded to 1.3625.

Jitters on the Irish debt problems are taking their toll on the Euro.

Read more…

China Lashes Fed Easing as Risk to Global Recovery

admin — Fri, 12 Nov 2010 04:39:02 +0000

China said on Thursday that the U.S. Federal Reserve’s move to ease monetary policy risked undermining the global economic recovery, adding that Washington “should not force others to take medicine for its own disease”.

A senior Chinese central bank official told reporters at the G20 summit in Seoul that the Fed’s move had caused “strong concern” around the globe, and major reserve countries ought to factor in the global impact of their policies.

Seoul’s G20 Summit Fails to Deliver

admin — Fri, 12 Nov 2010 04:35:24 +0000

There will be no pact on global trade imbalances at the Group of 20 summit because China and the US, or “G2″, are locked in opposition.

A British official today also conceded the G20 summit in the South Korean capital of Seoul would not come to an agreement on specific targets or a timetable to resolve the current account imbalances between nations.

The official said the G20’s industrial and emerging nations – particularly the US and China – had also not agreed on what was driving global imbalances and the role that currencies, for example, had played.

Political disagreements within the G20 over sensitive issues, such as the needed pace of China’s currency appreciation and a blueprint on how Germany should restructure its economy away from export-reliance, have stalled a G20 economic report.

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.

Read more about the ECB…

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.