U.S. Consternation Over the Renminbi is not New
The controversial issue of “currency manipulation” has resurfaced. However, Washington and Beijing have very different perceptions about the identity of the “currency manipulator.”
Category: Investing
Does the U.S. Congress Have it Wrong about China’s Currency?
America’s two political parties rarely agree, but one thing that unites them is their anger about ‘currency manipulation’, especially by China. Perhaps spurred by the recent appreciation of the dollar and the first signs that it is eroding net exports, congressional Democrats and Republicans are once again considering legislation to counter what they view as unfair currency undervaluation. The proposed measures include countervailing duties against imports from offending countries, even though this would conflict with international trade rules.
Will Bitcoin Soon Replace Paper Money?
An Australian economics professor has predicted that electronic currency such as Bitcoin will replace paper cash within a decade. Others believe this prediction is unrealistic given the slow adoption of the digital currency. But, all sides agree that digital currency will have an influence on the fiat currency systems of the world.
The Swiss Franc may not be the only Indefensible Currency Peg
Already driving a housing bubble in all major Asian cities from Seoul to Jakarta, significant hot money inflows are what Hong Kong, China and Singapore seek to avoid. However, Greece’s exit from the Eurozone coupled with subsequent quantitative easing by the People’s Republic of China (PRC) to jump-start flagging growth could quickly exacerbate this Asian dynamic.
Can Cryptocurrencies Evolve Beyond Bitcoin?
The Bank of England believes that cryptocurrencies like Bitcoin could be big news and even UK chancellor George Osborne is tweeting about it. But it is important to note the detail in the central bank’s comments. It is talking about forming its own digital currencies in a trend which could yet see Bitcoin take a back seat in the future it helped to create.
Broaden Your Analysis When Counting the Costs of a Strong Dollar
Numerous companies have reported that developments in the currency markets, especially the dollar’s appreciation, has been an important headwind on their earnings. The logic is compelling. US S&P 500 companies earn almost 50% of their revenue from foreign markets. Given the greenback’s appreciation, those foreign earnings translate into less dollar earnings.
The Argument for Renminbi Inclusion in the SDR Basket
As the next five-year review of the IMF’s international reserve asset approaches, reviewers should strongly consider the case for including the Chinese yuan in the basket.
The Special Drawing Rights (SDR) is an international reserve asset used to supplement IMF member countries’ official reserves. Its value is based on a basket currently consisting of four key international currencies. This includes the US dollar, euro, British pound and the Japanese yen currently.
Who Exactly, Pays to Lend Money?
All that is solid is melting into the air, or that is how it feels since several central banks in Europe have adopted negative policy rates. Sweden’s Riksbank became the latest with today’s move (-10 bp). The President of the Swiss National Bank assures us there is a limit, but it is not at the SNB’s -75 bp LIBOR target, which is where the Danish central bank has put its key CD rate.
Lloyds Bank Complicates Investing for Its Investors
If you need a reminder of how complex investing in the stock market can be, look no further than the row currently raging between Lloyds Bank and up to 100,000 investors who helped to bail it out in 2009 by agreeing to take up some rather special corporate bonds.
Will the Price of Oil Rise on Demand for Refined Products?
In a previous article I posted a chart from the International Energy Agency’s recent Oil Market Report that shows global demand for refined products catching up to supply by the 3rd quarter of this year. My opinion is that all of the analysts who are now blaming the sharp drop in oil prices on a “glut” of supply could change their tune quickly as consumers adjust to lower fuel costs. Just as higher costs reduce demand for any commodity, lower costs will increase demand.
