New York - The dollar experienced one of the major one day drops against the Japanese yen in a span of three weeks, yesterday. The fall in the USD is said to be backed by a report showing a sudden outflow of resources from the U.S. in the month of August.
USD, at 116.58, was 0.7 percent weaker vs. the Japanese yen in late morning trading in New York, recording one of the biggest one day falls since mid September. Alongside this entire market scenario, the Euro traded lesser by 0.3 percent at $1.4162.
It all started with more selling in the USD against the Yen in Asian trading market, but it picked up pace soon after the United States Treasury announced that the nation had revealed a highest net 163 billion USD outflow in the month of August.
This triggered the foreign investors to run away from the dollar-designated funds during that month. This was a result of the compression in the U.S. sub-prime credit and finance market which prompted this universal credit crisis.This disorder further provoked a half-percentage-point slice by the Federal Reserve in the standard interest rates, in the month of September.
Mark Meadows, currency strategist at Tempus Consulting in Washington was of the opinion that it was likely that the traders were moving their money outside of the U.S., which looked like a strategy for a further decline in the value of the U.S. dollar. This was because the traders seemed to believe that the cost of holding U.S. dollars was much more than what they would be receiving in return for it.
While dealing in carry trades, traders tend to make use of low-yielding currencies like the Japanese Yen, only to invest further in high-yielding currencies like the Euro and USD.
Nevertheless, risk aversion has ascended which dropped the assets globally on Tuesday and provoked the traders to slow down on their carry trade, which in turn resulted in shoving the low-yielding Japanese Yen to a good rise.
Other than the USD, the Australian dollar also dropped bout 1.5 percent to a price of 0.8853 against the U.S. dollar and the New Zealand dollar feel even more by a good 2 percent to trade at 0.7434.The Japanese Yen also fell by 1 percent and was last traded at 165.18 against the Euro.
Tuesday, October 23, 2007
Rupee strengthens against US Dollar by 11 paise
Mumbai – In late morning deals on Friday, rupee was strengthened by 11 paise against US dollar, sustained by an industry movement in equity market and flaws in dollar abroad.
The local currency resumed industry at 41.09/11 from sudden close at 41.09/11 and afterwards flowed to 41.0450/0550 per dollar in late morning deals in the active trade at the interbank foreign exchange market.
The benchmark Sensex flowed further by about 67.40 points during morning trade to touch 15,189.41, increasing more than 1,000 points from past August 24.
The weak dollar abroad market also assists the rupee opinion.
Due to decrease in the demand of dollar rupee gained. Oil refiners were steady buyers in the greenback in the last few days to meet their month-end expenses.
The main factors operating in favour of rupee according to Forex dealers are equity markets and weak dollar abroad.
Dollar’s weakness in international markets was recognized to indications of a possible interest rate cut.
The local currency resumed industry at 41.09/11 from sudden close at 41.09/11 and afterwards flowed to 41.0450/0550 per dollar in late morning deals in the active trade at the interbank foreign exchange market.
The benchmark Sensex flowed further by about 67.40 points during morning trade to touch 15,189.41, increasing more than 1,000 points from past August 24.
The weak dollar abroad market also assists the rupee opinion.
Due to decrease in the demand of dollar rupee gained. Oil refiners were steady buyers in the greenback in the last few days to meet their month-end expenses.
The main factors operating in favour of rupee according to Forex dealers are equity markets and weak dollar abroad.
Dollar’s weakness in international markets was recognized to indications of a possible interest rate cut.
Euro Jumps to Three-Week High; Trading Above $1.37
New York – Last week on Friday, euro switched to a three week high against the US dollar. It had passed through a technical level approximately $1.3680 that generated more buying and it was pushed above $1.3700.
Paul Bednarczky who is a currency strategist at 4cast consultancy in London said, “Now it’s the month end and U.S. has a long weekend ahead so it basically looks like some bank in New York came in early and they had bought some euros”.
Some traders are away because of the holiday this week which is making the market more susceptible to many areas he added.
The single currency has reached as high as $1.3719 early Friday, its highest level since Aug. 9 when it touched $1.3817.
Euros had been experiencing changing odds during late night sessions for quite long following the reports that on Friday president George W. Bush might announce a relief package for the U.S housing sector.
As reported by EBS, Friday witnessed an increase in Euros from $1.3624 to $1.3718 while dollar was at Y116.23 from Y115.79. Late Thursday saw Euro at $1.3718 from $1.3624 while U.K pound went from $2.0121 to $2.0227. Also, the dollar was estimated at CHF1.1994 from CHF1.2039.
Paul Bednarczky who is a currency strategist at 4cast consultancy in London said, “Now it’s the month end and U.S. has a long weekend ahead so it basically looks like some bank in New York came in early and they had bought some euros”.
Some traders are away because of the holiday this week which is making the market more susceptible to many areas he added.
The single currency has reached as high as $1.3719 early Friday, its highest level since Aug. 9 when it touched $1.3817.
Euros had been experiencing changing odds during late night sessions for quite long following the reports that on Friday president George W. Bush might announce a relief package for the U.S housing sector.
As reported by EBS, Friday witnessed an increase in Euros from $1.3624 to $1.3718 while dollar was at Y116.23 from Y115.79. Late Thursday saw Euro at $1.3718 from $1.3624 while U.K pound went from $2.0121 to $2.0227. Also, the dollar was estimated at CHF1.1994 from CHF1.2039.
Global Stock meeting results in progress of Asian Currencies - Rupiah and Peso
Bloomberg, August 22, 2007 – The currencies that offer highest yields amongst the other currencies in Asia are the Indonesian Rupiah and Philippine Peso. These currencies rose as gains in global stocks encouraging investors to buy market resources that are rising.
The day before, the Jakarta Composite Index bought more shares than they sold after the overseas funds surged 3 percent because of this the value of Rupiah raised. The central bank will meet to decide on interest rates tomorrow, before which, the value of peso has already risen by 1 percent mostly in Asia. Comparing the costs of U.S. dollars with Philippines and Indonesia, US cost is 5.25 percent and Philippines borrowing cost is 6 percent and Indonesia’s is 8.25 percent.
An economist at forecast Singapore, Vishnu Varathan said “People are trying to go back to higher yielding currencies, but in a precise way”.
According to the information collected, Rupiah gained 0.5 percent to 9395 against the dollar at 3:44 pm in Jakarta. This currency is not a good performer this year as it lost 4.3 percent. The peso rose to 46.455 per dollar.
Marcelo Ayes, senior treasury vice president at Rizal Commercial Banking Corp. in Manila said that the peso rose on thought that the central bank is selling dollars to stop the currency from reaching the 47 level.
“The central bank is trying to smoothen the currency movement, given the recent instability in the market,'’ said Ayes.
When related to losses in sub prime mortgages, spread nine of ten Asia’s most trades currencies have fallen this month. South Korea’s won fell 0.1 percent to 944.10.
Instability in the market
Japan and South Korea’s finance ministers said today that financial market disorders needs to be closely watched to make sure that risks to the global economic expansion do not become too much.
According to the statement the ministers said “accepted the need for constant observing of the instability in international financial markets”.
U.S. Treasury Secretary Henry Paulson said in an interview the day before, that instability in credit markets will “take time” to fall down.
The Thai baht fell 0.2 percent onshore to 34.46. Prime Minister Surayud Chulanont said Dec. 23 is the “most appropriate'’ date for a general election, and that will be discussed with the Election Commission. His comments came after the majority of eligible voters approved the junta’s draft for a constitution on Aug. 19.
The day before, the Jakarta Composite Index bought more shares than they sold after the overseas funds surged 3 percent because of this the value of Rupiah raised. The central bank will meet to decide on interest rates tomorrow, before which, the value of peso has already risen by 1 percent mostly in Asia. Comparing the costs of U.S. dollars with Philippines and Indonesia, US cost is 5.25 percent and Philippines borrowing cost is 6 percent and Indonesia’s is 8.25 percent.
An economist at forecast Singapore, Vishnu Varathan said “People are trying to go back to higher yielding currencies, but in a precise way”.
According to the information collected, Rupiah gained 0.5 percent to 9395 against the dollar at 3:44 pm in Jakarta. This currency is not a good performer this year as it lost 4.3 percent. The peso rose to 46.455 per dollar.
Marcelo Ayes, senior treasury vice president at Rizal Commercial Banking Corp. in Manila said that the peso rose on thought that the central bank is selling dollars to stop the currency from reaching the 47 level.
“The central bank is trying to smoothen the currency movement, given the recent instability in the market,'’ said Ayes.
When related to losses in sub prime mortgages, spread nine of ten Asia’s most trades currencies have fallen this month. South Korea’s won fell 0.1 percent to 944.10.
Instability in the market
Japan and South Korea’s finance ministers said today that financial market disorders needs to be closely watched to make sure that risks to the global economic expansion do not become too much.
According to the statement the ministers said “accepted the need for constant observing of the instability in international financial markets”.
U.S. Treasury Secretary Henry Paulson said in an interview the day before, that instability in credit markets will “take time” to fall down.
The Thai baht fell 0.2 percent onshore to 34.46. Prime Minister Surayud Chulanont said Dec. 23 is the “most appropriate'’ date for a general election, and that will be discussed with the Election Commission. His comments came after the majority of eligible voters approved the junta’s draft for a constitution on Aug. 19.
As Instability Raises, Australian and New Zealand Dollars fades
Bloomberg, Aug 22, 2007 — The Australian and New Zealand dollars fall as increasing instability prevented traders from unsafe investments like buying assets in countries with advanced give ups financed by borrowing in Japan.
The decrease today widens the two currencies loss in the past month to at least 15 percent as compared to yen. This is the biggest decrease amongst the 16 liveliest currencies. The extending outcome of losses linked to the U.S. housing market almost doubled the currency instability, revealing carry-trade bets to greater risk.
Peter Pontikis, treasury strategist at Suncorp - Metway Ltd. in Brisbane, Australia said, “Instability has made people gun-shy of the carry trade'’. Referring the currencies by their nicknames he said, “With the supporting matters, neighboring banks and the lack of liquidity, people will be hesitant to help the Aussie and kiwi'’.
The value of Australian dollar was 80.33 late in Asia the last day, where it fell down to 79.98 in Sydney today. The currency dropped to 91.41 yen from 91.97.
New Zealand’s dollar bought 69.12 U.S. cents from 69.81 cents yesterday. It fell to 79.01 yen from 79.91 in Asia the last day.
New Zealand’s equivalent measure was at 21 percent, from the average 10.3 percent for the last 12 months. Higher instability implies an increase in exchange-rate fluctuation risk.
The New Zealand Dollar still remains the top performer. Even after a 19 percent fall in the last month New Zealand dollar gained 6.7 percent and is still the top performer when compared to yen in the past 12 months. Australian currency has lost 15 percent in a month, dipping one-year gains to 3.1 percent.
Japan’s 0.5 percent overnight lending rate is the lowest of any major economy. New Zealand’s central bank raised borrowing costs four times. It has increased to 8.25 percent this year and the Reserve Bank of Australia increased rates on august 8 to 6.5 percent, making their currencies more likable to carry trades.
Jens Nordvig, senior currency strategist at Goldman Sachs & Co. in New York said, “we have seen a great point in instability and that’s made it very hard to re-enter carry trades'’.
Both the currencies fell down the day before after U.S. Treasury Secretary Henry Paulson said instability will “take time” to fall down. After then they had a meeting with Federal Reserve Chairman Ben S. Bernanke and Senate Banking Committee Chairman Christopher Dodd.
Raising of Bonds
The newspaper reported, the lack of liquidity in the bank-bill market may prompt the Reserve Bank to step in. The central bank was an onlooker at a meeting this week of association members who were called to discuss the issue, the Post said.
The day before, the government’s Debt Management Office increased the size of this week’s bond auction and presenting a bond of two more years, because of market demand for government securities.
Australian government bonds increased, with the yield on the level 10-year note declining 1 basis point to 5.85 percent. According to data collected by Bloomberg, New Zealand’s government debt fell, with the yield on the 10-year bond gaining 4 basis points to 6.23 percent.
The decrease today widens the two currencies loss in the past month to at least 15 percent as compared to yen. This is the biggest decrease amongst the 16 liveliest currencies. The extending outcome of losses linked to the U.S. housing market almost doubled the currency instability, revealing carry-trade bets to greater risk.
Peter Pontikis, treasury strategist at Suncorp - Metway Ltd. in Brisbane, Australia said, “Instability has made people gun-shy of the carry trade'’. Referring the currencies by their nicknames he said, “With the supporting matters, neighboring banks and the lack of liquidity, people will be hesitant to help the Aussie and kiwi'’.
The value of Australian dollar was 80.33 late in Asia the last day, where it fell down to 79.98 in Sydney today. The currency dropped to 91.41 yen from 91.97.
New Zealand’s dollar bought 69.12 U.S. cents from 69.81 cents yesterday. It fell to 79.01 yen from 79.91 in Asia the last day.
New Zealand’s equivalent measure was at 21 percent, from the average 10.3 percent for the last 12 months. Higher instability implies an increase in exchange-rate fluctuation risk.
The New Zealand Dollar still remains the top performer. Even after a 19 percent fall in the last month New Zealand dollar gained 6.7 percent and is still the top performer when compared to yen in the past 12 months. Australian currency has lost 15 percent in a month, dipping one-year gains to 3.1 percent.
Japan’s 0.5 percent overnight lending rate is the lowest of any major economy. New Zealand’s central bank raised borrowing costs four times. It has increased to 8.25 percent this year and the Reserve Bank of Australia increased rates on august 8 to 6.5 percent, making their currencies more likable to carry trades.
Jens Nordvig, senior currency strategist at Goldman Sachs & Co. in New York said, “we have seen a great point in instability and that’s made it very hard to re-enter carry trades'’.
Both the currencies fell down the day before after U.S. Treasury Secretary Henry Paulson said instability will “take time” to fall down. After then they had a meeting with Federal Reserve Chairman Ben S. Bernanke and Senate Banking Committee Chairman Christopher Dodd.
Raising of Bonds
The newspaper reported, the lack of liquidity in the bank-bill market may prompt the Reserve Bank to step in. The central bank was an onlooker at a meeting this week of association members who were called to discuss the issue, the Post said.
The day before, the government’s Debt Management Office increased the size of this week’s bond auction and presenting a bond of two more years, because of market demand for government securities.
Australian government bonds increased, with the yield on the level 10-year note declining 1 basis point to 5.85 percent. According to data collected by Bloomberg, New Zealand’s government debt fell, with the yield on the 10-year bond gaining 4 basis points to 6.23 percent.
US Dollar falls due to rate cut in Federal Funds
Singapore – Against major competitors, US dollar had changed on Wednesday when the dealers considered the probability of Federal Reserve cutting its funds rate in the coming term in a continued effort to reinstate calm in credit markets.
According to Senator Chris Dodd, chairman of the senate banking committee, Fed chairman Ben Bernanke had said on Tuesday that to address the credit crisis in the US financial system he was completely ready to use all the tools at his removal. After a closed-door meeting with Bernanke and Treasury Secretary Henry Paulson, Dodd stated Bernanke’s comments to the press.
The senator, who is looking for the Democratic Party’s selection for the 2008 presidential promotion, criticized the Fed for acting too gradually in tightening system for lenders, but commended the central bank’s decision on Friday to insert more liquidity into the market by lowering the discount rate by 50 basis points.
The remarks primarily fueled hope that the fed will follow its discount rate cut by minimizing quickly fed funds rate at its next meeting. But the hopes faded after Jeffrey Lacker, head of Richmond Federal Reserve, said that financial market instability was not the sufficient reason by itself for the Fed to cut rates.
Jeffrey Lacker said in his speech, that “Interest rate policy needs to be directed by the viewpoint for real expenditure and increase. Federal funds rate adjustments in response to changes in the outlook for inflation and growth should continue to endeavor to stabilize inflation expectations”.
Thomas Lam, Treasury economist at United Overseas Bank was not essentially trying to shut the door to the idea of a rate cut.
If the current disorder in the credit markets begins to blow the outlook for growth or rise, the Fed would have to move, said Lam, but “they don’t want to give the impression that they are bonding anyone out — that would support even more risk-taking.”Lam is expecting the Fed to convey at least 25 basis points to cut either at its September meeting or even in an inter-meeting move.
“The risks haven’t really worsened and there is still a chance they could embark on an emergency cut,” he said. If not, “they might cut by at least 50 basis points at the next meeting.”
Dollars last trading was at 114.59 yen compared with 114.36 yen in the early trade.
According to the Thursday’s interest rate decision by the Bank of Japan yen is expected to remain in a tight range ahead.
“No one expects it to be anything but a ‘no change’ statement,” said Ian Copsey, senior financial analyst at Global Forex Trading. “However, this is the first rate decision following the turmoil and what the market is now focusing on how the central banks are going to react.”
The euro was last trading at 1.3490 US dollars, up from 1.3457 early in the session. The European currency came under pressure after a key indicator of business confidence in Germany came in well short of market expectations on Tuesday. Adding to the downdraft, the head of one of Germany’s largest state-owned banks warned that foreign lenders were cutting off credit lines to banks in Germany, Europe’s biggest economy.The UK Times reported on Wednesday that the credit crisis was inching closer to the “heart of the British financial system”.
According to Senator Chris Dodd, chairman of the senate banking committee, Fed chairman Ben Bernanke had said on Tuesday that to address the credit crisis in the US financial system he was completely ready to use all the tools at his removal. After a closed-door meeting with Bernanke and Treasury Secretary Henry Paulson, Dodd stated Bernanke’s comments to the press.
The senator, who is looking for the Democratic Party’s selection for the 2008 presidential promotion, criticized the Fed for acting too gradually in tightening system for lenders, but commended the central bank’s decision on Friday to insert more liquidity into the market by lowering the discount rate by 50 basis points.
The remarks primarily fueled hope that the fed will follow its discount rate cut by minimizing quickly fed funds rate at its next meeting. But the hopes faded after Jeffrey Lacker, head of Richmond Federal Reserve, said that financial market instability was not the sufficient reason by itself for the Fed to cut rates.
Jeffrey Lacker said in his speech, that “Interest rate policy needs to be directed by the viewpoint for real expenditure and increase. Federal funds rate adjustments in response to changes in the outlook for inflation and growth should continue to endeavor to stabilize inflation expectations”.
Thomas Lam, Treasury economist at United Overseas Bank was not essentially trying to shut the door to the idea of a rate cut.
If the current disorder in the credit markets begins to blow the outlook for growth or rise, the Fed would have to move, said Lam, but “they don’t want to give the impression that they are bonding anyone out — that would support even more risk-taking.”Lam is expecting the Fed to convey at least 25 basis points to cut either at its September meeting or even in an inter-meeting move.
“The risks haven’t really worsened and there is still a chance they could embark on an emergency cut,” he said. If not, “they might cut by at least 50 basis points at the next meeting.”
Dollars last trading was at 114.59 yen compared with 114.36 yen in the early trade.
According to the Thursday’s interest rate decision by the Bank of Japan yen is expected to remain in a tight range ahead.
“No one expects it to be anything but a ‘no change’ statement,” said Ian Copsey, senior financial analyst at Global Forex Trading. “However, this is the first rate decision following the turmoil and what the market is now focusing on how the central banks are going to react.”
The euro was last trading at 1.3490 US dollars, up from 1.3457 early in the session. The European currency came under pressure after a key indicator of business confidence in Germany came in well short of market expectations on Tuesday. Adding to the downdraft, the head of one of Germany’s largest state-owned banks warned that foreign lenders were cutting off credit lines to banks in Germany, Europe’s biggest economy.The UK Times reported on Wednesday that the credit crisis was inching closer to the “heart of the British financial system”.
Market stability return falls heavy on Yen
slight fall in global trade scenario. The return of market stability is a result of the assurance given yesterday by Ben Bernanke, Chairman Us Federal Reserve.
The words of chairman Bernanke also targeted the assurance process for nervous investors. His comments calmed both the investors and market condition with Asian market closing stable and US equities closing up.
It is reported that a private meeting session was held among higher officials, chairman Bernanke, treasury secretary Henry Paulson and Senator Chris Dodd, to talk on the current market situation.
Chairman of senate banking committee, Senator Chris Dodd, informed press about the meeting, also he said that Chairman bernanake is confident as he plans to use all the necessary tools and means to tackle credit emergency in US market.
Comments of chairman Bernanke has burdened yen to fall which also saw investors trading off
Though, doubts and questions are being raised on the duration of this sudden relief from instability of financial market. Trade analysts blame the looming cut rates in Fed Funds darted by Richmond Federal Reserve head, Jeffery Lacker.
Lacker said the instability in market itself is not an enough reason for rate cuts by Fed.
Currency economist at bank of Tokyo-Mitsubishi, Derek Halpenny, quoted “it is doubtful to say how adequate a further response to ongoing crisis would be”. He also said “current situation predicts more chaos in market”
Yen is now focused on the press conference of Bank of Japan to be held later in the day. While, it is anticipated that bank of Japan is going to respond by putting rates on hold for sometime, experts are hoping to get some words on the slow down of carry trade.
The logic behind recent build up of yen is said to be the strategy of investors of avoiding risk by purchasing low yielding currencies to trade with high yielding ones.
An analysts, BNP Paribas, said “Japanese household balance sheets and consumer budget is likely to be affected unenthusiastically, by the build up of yen currency”
In the meantime, to the fore of June industrial order statistics for the 13-nation single currency zone, Euro has been found to be steady as compared to the dollar. As compared to the last month1.7 percent the statistics are likely to rise to 2.1 percent in coming months.
Day before, pound suffered a drop following the scare of credit crisis shifting towards UK, as bank of England reported purchase of 314mln stg by a lender Barclays (named by daily mail).
Following the amalgamation of British industry, Pound found stability ahead of monthly industrial trends survey.
The words of chairman Bernanke also targeted the assurance process for nervous investors. His comments calmed both the investors and market condition with Asian market closing stable and US equities closing up.
It is reported that a private meeting session was held among higher officials, chairman Bernanke, treasury secretary Henry Paulson and Senator Chris Dodd, to talk on the current market situation.
Chairman of senate banking committee, Senator Chris Dodd, informed press about the meeting, also he said that Chairman bernanake is confident as he plans to use all the necessary tools and means to tackle credit emergency in US market.
Comments of chairman Bernanke has burdened yen to fall which also saw investors trading off
Though, doubts and questions are being raised on the duration of this sudden relief from instability of financial market. Trade analysts blame the looming cut rates in Fed Funds darted by Richmond Federal Reserve head, Jeffery Lacker.
Lacker said the instability in market itself is not an enough reason for rate cuts by Fed.
Currency economist at bank of Tokyo-Mitsubishi, Derek Halpenny, quoted “it is doubtful to say how adequate a further response to ongoing crisis would be”. He also said “current situation predicts more chaos in market”
Yen is now focused on the press conference of Bank of Japan to be held later in the day. While, it is anticipated that bank of Japan is going to respond by putting rates on hold for sometime, experts are hoping to get some words on the slow down of carry trade.
The logic behind recent build up of yen is said to be the strategy of investors of avoiding risk by purchasing low yielding currencies to trade with high yielding ones.
An analysts, BNP Paribas, said “Japanese household balance sheets and consumer budget is likely to be affected unenthusiastically, by the build up of yen currency”
In the meantime, to the fore of June industrial order statistics for the 13-nation single currency zone, Euro has been found to be steady as compared to the dollar. As compared to the last month1.7 percent the statistics are likely to rise to 2.1 percent in coming months.
Day before, pound suffered a drop following the scare of credit crisis shifting towards UK, as bank of England reported purchase of 314mln stg by a lender Barclays (named by daily mail).
Following the amalgamation of British industry, Pound found stability ahead of monthly industrial trends survey.
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