Currency - General News

[winston]

The Four Real "Safe-Haven" Currencies By Martin Hutchinson, Money Morning

So if we're searching for safe-haven currencies, which ones should we look at?


The European euro? That won't do - there's too much of a chance of it splitting in two. That would be either good or bad - good if the weak-sister PIIGS of Portugal, Ireland, Italy, Greece and Spain split off to form their own weak bloc (leaving the euro strong), or bad if Germany and a few stronger countries split off (leaving only the weaker currencies in the euro).

Either way, the euro is a risk, and a big one: After a split, the currencies would probably shift by 20% to 30% against each other, to give the weaker countries a chance of exporting their way out of problems.


The British pound sterling? What a very sweet, old-fashioned idea. If this were 1911 - or, better still, 1821 - this would be the ideal safe haven. But it's 2011, and Britain has all the same problems as the United States - only to a greater degree.


The Japanese yen? Japan has a much worse debt problem than the United States, and only the fact that Japan owes all that money to itself is keeping the Japan Government Bond (JGB) market stable.


The Chinese renminbi? A fashionable solution, but the reality is that China still won't let its own citizens get their money out freely. What's more, there is a huge glop of bad debts in the Chinese banking system that at some stage will cause big problems - so big, in fact, that the 2008 financial-system crash and collapse of Lehman Brothers Holdings (PINK: LEHMQ) will seem like a springtime stroll.

Such afterthoughts as the Brazilian real, Australian dollar or Canadian dollar? While I'll grant you that Canada is much-better run than the United States, the ugly truth is that Brazil and Australia are no better run than any other country. In fact, all three of these countries had the great fortune to be heavily dependent on commodities at a time when commodity prices happened to soar.

If commodity prices decline, the innate problems facing each of these currencies' problems will become painfully apparent.

As our trip around the world

There are thus very few safe-haven currencies for you to invest in.

There are actually four clear winners:


• The Swiss franc: Switzerland is the ideal European country - chiefly because it has a large-but-safe banking system. The Swiss National Bank made UBS AG (NYSE: UBS) and Credit Suisse Group AG (NYSE ADR: CS) recapitalize themselves properly and have forced the two to do more wealth management and less investment banking.

• The Norwegian crown: Norway has oil, a large trust fund and no European Union membership. That trust fund (actually a very-well-managed, $570 billion sovereign wealth fund) makes this one ideal - even if oil prices collapse.

• The Singapore dollar: This is a beautifully run country - the least corrupt in the world, in fact - and is a banking-and-trading entrepôt, to boot.

• The Chilean peso: Yes, I'm recommending a South American currency as a safe-haven currency - my 1970s global-merchant banking colleagues would recoil in horror. All the same, Chile is less corrupt than the United States. It has a commodity economy, but is better run than Australia (and less likely to be under cut by cheaper labor, since Chilean labor is still quite cheap). And it has a trust fund (sovereign wealth fund) to guard against a return of low commodity prices.


Moves to Make Now

Even when you know what currencies you want to be in, buying them is not all that easy. Generally, the currencies themselves can be bought at any major commercial bank, although you may get killed on the rate. However, this will give you a pile of paper money with no yield and a danger of being eaten by mice.

A better alternative is to buy bank deposits. Here our friends EverBank can help you; it offers a bank-deposit service in a wide range of foreign currencies. Three of our four currencies are on EverBank's list; you can open accounts in Norwegian crowns, Singapore dollars and Swiss francs - but not in Chilean pesos.

Foreign-currency bonds are another alternative, although not all brokerages allow you to buy them. The difficulty here is the minimum amounts are generally large, and there is a substantial bid-offer spread. Still, this is probably your best alternative for Chilean pesos, where the government is currently rated AA for Chilean-peso obligations and 10-year peso government bonds yield about 2.4%.

Safe-haven currencies gave me such a sense of security when I turned to them during the economically tumultuous 1970s that I still can recall the feeling today - nearly 40 years later; now it's time for you to seek out that kind of security.

http://moneymorning.com/2011/07/26/safe ... aces-hide/

[winston]

Hmmm..... does that mean that everyone is buying the USD now with their own currency, to weaken their own currency against the USD ?

A "new stage" in the global currency wars may have started last night

Just eight months ago, Brazilian Finance Minister Guido Mantega declared a "truce" in competitive currency devaluations.

Now, Japanese and Swiss moves to weaken the yen and the franc show reviving tension in foreign-exchange markets as the deteriorating U.S. economy weighs on the dollar.

'A New Stage'

"We seem to be entering a new stage of the currency wars where it's not just the emerging markets that are responding to broad dollar weakness," said Callum Henderson, global head of currency research at Standard Chartered Plc in Singapore, who has written books on currency markets.

"Expect much more intervention in the future and further acrimony in terms of how the U.S. dollar is doing."


Source: Bloomberg:

[winston]

Investors look to Asian currencies By Alice Ross


Singapore dollars, New Zealand dollars and South Korean wons are among the new wave of “safe haven” currencies attracting UK investors as concerns over the health of Western economies grow.

Wealth managers say they are increasing their clients’ exposure to Asian currencies in particular, in countries that are less indebted and faster growing that those in the West.

Many of these currencies have not traditionally been used as safe havens, and so are not considered to be overvalued – unlike the Swiss franc and the Japanese yen.

This week, both the Swiss and Japanese governments intervened to depress the value of their currencies, after large inflows from overseas investors worried about US and eurozone debt pushed them to record highs against the US dollar.

http://www.ft.com/cms/s/2/269cfdfe-beb8 ... abdc0.html

[kennynah]

has anyone tried FXCM platform?

[winston]

Asia Currencies May Fall 10% This Year, Citigroup Says: Technical Analysis By Kyoungwha Kim

An Asian benchmark currency index may drop 10 percent to the lowest level since March 2009 by year-end, should losses widen at the same pace seen in 2008, according to Citigroup Inc. technical analysis.

A weekly chart of the Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, closed below the 55-week moving average, signaling further declines, Shyam Devani, London-based technical analyst at Citigroup, said in an interview yesterday.

It also broke below a trend line linking lows for the index in 2009 and 2010. The index may initially drop to the 200-week moving average, he said.

The Asia Dollar Index has slumped 4.4 percent since touching a 14-year high on July 27, leaving a 1.3 percent loss for the year. The gauge was up 0.2 percent at 114.99 as of 8:29 a.m. in Singapore.

“The 200-week moving average is at 112.17 and is the target” in the near term, Devani said. “If the move this year is going to be as aggressive as that seen in 2008 then an extended target would be 104.”

The loss may be led by South Korean won, which has “breached important” support at 1,172 to the dollar, suggesting a test of 1,277, Devani said. The currency fell 1 percent to 1,182.70 in Seoul today, taking this month’s decline to 9.8 percent.

http://www.bloomberg.com/news/2011-09-2 ... lysis.html

[winston]

Investors turn bearish on Asia FX, cut Singapore dollar bets

Investors turned bearish on most emerging Asian currencies in the last two weeks, as Europe's debt crisis deepened, though they slightly raised positions in the Chinese yuan, a Reuters poll showed on Thursday.

The survey of 12 currency analysts, conducted over two days, found investors turned pessimistic on the Singapore dollar, reducing bets on the city-state's currency by the most since April 2009.

Currency players also became the most bearish on the Indian rupee since mid-September.

The Reuters survey focused on what analysts believe are the current market positions in eight Asian emerging market currencies: Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso and Malaysian ringgit.

For the Singapore dollar, 10 out of 12 analysts were bearish, while two were bullish.

The local dollar on Thursday breached a technical support line.

All of the analysts were bearish on the rupee.

The Indian currency may retest a record low of 52.20 per dollar on a widening trade deficit, falling car sales and a Moody's outlook downgrade of the country's banking sector.

http://www.brecorder.com/money-a-bankin ... 8/1250820/

[iam802]

So, more money flowing out of SGD (and SG) ?

[winston]

by kennynah » Fri Jan 06, 2012 1:01 am

the trick to playing currencies is "fire power"... as long as one has sufficient funds to tahan the volatility, there is a high chance of winning in the long run... but it also means that one has to be more so than in other forms of investing, the ability to accept to a loss early on.

look into any currency chart in the recent years and you will see what i mean. the std deviation is more or less permutable. those who endlessly lose are usually those who bite a size too big and give very little room for drawndowns. once margin call happens to these people, they either surrender or cut loss only to see their price come back in a short while.

i know becos i have been through this stupidity once too often...

[winston]

On Fast Money, CNBC:-

Amelia Bourdeau, a director at Westpac Instituional Bank, said the markets didn't anticipate the length to which the Fed would hold interest rates low.

He said the move will provide an extra boost to risk taking, expecially in commodity currencies and the euro.

She provided viewers with a trade: long the New Zealand dollar, short the sterling.

Source: The Street

[winston]

Only US$1t a day and about 40% is on the EUR ? Not that difficult to manipulate the market, right ?

Currency Trading at Record $977 Billion a Day in North America, Fed Says By Catarina Saraiva

Foreign-exchange trading in North America rose to a record $977 billion a day in October, while slowing in the U.K., Australia and Singapore, according to central bank surveys.

The average daily volume in October compares with a revised $856 billion in April and $809 billion in October 2010, the Federal Reserve’s Foreign Exchange Committee said in a statement today, citing results from its semi-annual survey. The October 2011 increase was due mainly to a 28 percent rise in spot turnover from the April period.

Turnover in the euro versus the dollar represented 37 percent, or the largest share, of reported trading. Dollar-yen trading was the second busiest at 10 percent.

Currency-market trading in the U.K. dropped 3 percent to $1.97 trillion a day in October compared with April, the Foreign Exchange Joint Standing Committee said in a statement on the Bank of England’s website today.

The fall was led by a 9 percent drop in foreign exchange swaps activity. Spot turnover rose 2 percent to a record high, the committee said.

Trading dropped 1.1 percent in Singapore during the six- month period, according to the Singapore Foreign Exchange Market Committee. Average daily turnover in over-the-counter foreign- exchange derivatives fell 2.1 percent to $46 billion.

http://www.bloomberg.com/news/2012-02-0 ... -says.html