Showing posts with label US dollar. Show all posts
Showing posts with label US dollar. Show all posts
Wednesday, July 22, 2015
Oil prices rebound slightly after ducking under $50
Sunday, June 14, 2015
Zimbabweans get chance to swap 'quadrillions' for a few US dollars
Saturday, May 16, 2015
US dollar may get a second wind
Since mid-April, the dollar has declined by 7% versus the euro and 6% versus the British pound, moving back to levels last seen around January.
Saturday, September 08, 2012
ECB plan pushes euro to two-month high against dollar
The euro has strengthened to a two-month high against the US dollar, as the European Central Bank's bond-buying plans continued to please the markets.
Saturday, November 13, 2010
Why dollars must not sink and tempers must not rise at the G20
The global economic crisis demands that all nations consider the wider international picture rather than narrow national self-interest
Brazilian President Luiz Inacio Lula da Silva may be leaving the world stage, but he still knows how to make an impact. His blunt prediction on the first day of the G20 summit in Seoul – that the world economy was headed for "bankruptcy" unless rich nations raise consumer demand rather than relying on exports to drive recovery – was a warning shot fired at Washington.
The US, which has been accused by key developing nations of attempting to deflate the dollar with a $600bn quantative easing programme, also came under fire from China. "Don't make other people take the medicine for your disease," Yu Jianhua, a director general at China's ministry of commerce, told reporters in South Korea.
At the heart of this is the nature of global imbalances. For America, growth should return by exporting more and getting people to spend at home. For many developing nations who rely on selling goods and services into richer markets, this means sacrificing themselves on the altar of US interests. It's not just big, poorer nations, that are concerned: Germany, the world's third-largest exporter, is singing the same tune as South Korea, China and Brazil.
These countries see the dollar's fall as part of a feared circle of competitive devaluations across the major economies. Yet the US can simply shrug these attacks off – as its central bank can keep printing dollars.
The result is lots of money flowing into emerging economies, which are left to face a series of difficult decisions over the influx of dollars. Deflating a series of asset bubbles is the last thing developing nations need to tackle – especially given the bigger challenges of social inclusion, food security and infrastructure spending.
But if they sit on their hands and do nothing, poorer nations face damaging their export competitiveness by letting their currencies rise. If they intervene to keep their currencies low, the risk is that they end up holding lots of worthless greenbacks. The least palatable option is the tricky policy decision to use capital controls to keep the cash out.
What this boils down to is the inability of developing nations to translate their growing economic heft into meaningful pressure on the US. It is a dramatic illustration of where real power lies in the global system. The world's "emerging" powers are still that – and will be so for many years to come. They may represent the future, but developing nations lack the diplomatic firepower to sway the world's great powers.
What the world is dealing with is a legacy of history. The rules governing global monetary reform evolved in a uni-polar world where the dollar was dominant. Today we face a multi-polar system of currencies. The features of the past created today's problems. To insulate against volatile currency flows and speculative attacks, developing nations accumulated dollars. The dollar's role as the global reserve currency encouraged unsustainable lending in the US.
But what are the rules appropriate for both the richer nations and for large emerging markets such as China, South Africa, Brazil and India? It's hard to see how a public punch-up at Seoul is going to answer that question. The G20 aspires to be a global club, steering the world economy out of a slump – and that does mean countries must consider the international picture, rather than simply their own, narrow national interest. It means not just letting the dollar sink and tempers rise in South Korea.
Perhaps the rest of the world should recognise how important the US is to the global economy – and accepting that the world's richest nation might need a helping hand. At the same time, the G20 could also think about the poorest too – by throwing open their doors to goods and services from the least developed countries. The world's biggest economies need to prove that the G20 is more than just a place to talk to each other.
Source: Guardian
www.guardian.co.uk
Brazilian President Luiz Inacio Lula da Silva may be leaving the world stage, but he still knows how to make an impact. His blunt prediction on the first day of the G20 summit in Seoul – that the world economy was headed for "bankruptcy" unless rich nations raise consumer demand rather than relying on exports to drive recovery – was a warning shot fired at Washington.
The US, which has been accused by key developing nations of attempting to deflate the dollar with a $600bn quantative easing programme, also came under fire from China. "Don't make other people take the medicine for your disease," Yu Jianhua, a director general at China's ministry of commerce, told reporters in South Korea.
At the heart of this is the nature of global imbalances. For America, growth should return by exporting more and getting people to spend at home. For many developing nations who rely on selling goods and services into richer markets, this means sacrificing themselves on the altar of US interests. It's not just big, poorer nations, that are concerned: Germany, the world's third-largest exporter, is singing the same tune as South Korea, China and Brazil.
These countries see the dollar's fall as part of a feared circle of competitive devaluations across the major economies. Yet the US can simply shrug these attacks off – as its central bank can keep printing dollars.
The result is lots of money flowing into emerging economies, which are left to face a series of difficult decisions over the influx of dollars. Deflating a series of asset bubbles is the last thing developing nations need to tackle – especially given the bigger challenges of social inclusion, food security and infrastructure spending.
But if they sit on their hands and do nothing, poorer nations face damaging their export competitiveness by letting their currencies rise. If they intervene to keep their currencies low, the risk is that they end up holding lots of worthless greenbacks. The least palatable option is the tricky policy decision to use capital controls to keep the cash out.
What this boils down to is the inability of developing nations to translate their growing economic heft into meaningful pressure on the US. It is a dramatic illustration of where real power lies in the global system. The world's "emerging" powers are still that – and will be so for many years to come. They may represent the future, but developing nations lack the diplomatic firepower to sway the world's great powers.
What the world is dealing with is a legacy of history. The rules governing global monetary reform evolved in a uni-polar world where the dollar was dominant. Today we face a multi-polar system of currencies. The features of the past created today's problems. To insulate against volatile currency flows and speculative attacks, developing nations accumulated dollars. The dollar's role as the global reserve currency encouraged unsustainable lending in the US.
But what are the rules appropriate for both the richer nations and for large emerging markets such as China, South Africa, Brazil and India? It's hard to see how a public punch-up at Seoul is going to answer that question. The G20 aspires to be a global club, steering the world economy out of a slump – and that does mean countries must consider the international picture, rather than simply their own, narrow national interest. It means not just letting the dollar sink and tempers rise in South Korea.
Perhaps the rest of the world should recognise how important the US is to the global economy – and accepting that the world's richest nation might need a helping hand. At the same time, the G20 could also think about the poorest too – by throwing open their doors to goods and services from the least developed countries. The world's biggest economies need to prove that the G20 is more than just a place to talk to each other.
Source: Guardian
www.guardian.co.uk
Thursday, November 04, 2010
Shares hit two-year highs after US Fed move
US and UK shares hit two-year highs as global stock markets reacted positively to the decision by the Federal Reserve to pump $600bn (£373bn) into the US economy to try to boost its recovery.
Both the FTSE and Dow Jones indexes closed up 2%, while leading indexes in France and Germany rose sharply.
The price of oil also jumped, while the dollar fell against major currencies.
Although the Fed's move was widely expected, most analysts had predicted a lower figure of $500bn to be injected.
Weakening dollar
The FTSE 100 closed up 114 points at 5863, while the Dow gained 220 points to close at 11435.
In Paris, the Cac 40 climbed 74 points to 3,917, while Germany's Dax was up 117 points at 6,735.
Earlier, Asian shares closed higher, with Japan's Nikkei index gaining 199 points to finish at 9,359 and Hong Kong's Hang Seng rising 391 points to close at 24,536.
The price of oil also rose to its highest level since early April, with US light crude gaining $2 a barrel to $86.71. London Brent rose by $1.80 to $88.19 a barrel.
With more dollar cash in circulation and with the US government's policy of buying bonds with the $600bn putting downward pressure on interest rates, as expected the dollar weakened against major currencies.
The euro rose 2 cents against the dollar to $1.4239, while the pound also rose 2 cents to $1.6273. The dollar slipped to 80.66 yen, from 81.29 yen.
European reaction
European Central Bank president Jean-Claude Trichet refused to comment on the Fed's action at the ECB's monthly press conference.
However, he did say that he was confident the Fed still supported a strong dollar, despite reports that the second round of quantitative easing was designed to weaken the US currency, in order to make its exports more competitive.
"I have no indication that would change my trust in the fact that [Fed policymakers]... are not playing the strategy of the weak dollar," he said.
"It is in the interest of the US to have a strong dollar vis-a-vis the other floating currencies."
'On the hoof'
The latest move by the Fed has been dubbed QE2 as it follows the central bank's decision to pump $1.75tn into the economy during the downturn in its first round of quantitative easing.
Rob Carnell, chief international economist at the banking group ING, said the action was unusual because the economy is in a completely different shape to how it was before.
"[During the first round of QE], you had massive financial market disruptions - really serious problems, mortgage yields and rates were shooting through the roof, no one could borrow. That's clearly not the case right now," he told BBC World Service.
"The justification for it seems to have utterly changed... It's really policy on the hoof, trying to justify it as they go along."
Source: BBC
www.bbc.co.uk
Both the FTSE and Dow Jones indexes closed up 2%, while leading indexes in France and Germany rose sharply.
The price of oil also jumped, while the dollar fell against major currencies.
Although the Fed's move was widely expected, most analysts had predicted a lower figure of $500bn to be injected.
Weakening dollar
The FTSE 100 closed up 114 points at 5863, while the Dow gained 220 points to close at 11435.
In Paris, the Cac 40 climbed 74 points to 3,917, while Germany's Dax was up 117 points at 6,735.
Earlier, Asian shares closed higher, with Japan's Nikkei index gaining 199 points to finish at 9,359 and Hong Kong's Hang Seng rising 391 points to close at 24,536.
The price of oil also rose to its highest level since early April, with US light crude gaining $2 a barrel to $86.71. London Brent rose by $1.80 to $88.19 a barrel.
With more dollar cash in circulation and with the US government's policy of buying bonds with the $600bn putting downward pressure on interest rates, as expected the dollar weakened against major currencies.
The euro rose 2 cents against the dollar to $1.4239, while the pound also rose 2 cents to $1.6273. The dollar slipped to 80.66 yen, from 81.29 yen.
European reaction
European Central Bank president Jean-Claude Trichet refused to comment on the Fed's action at the ECB's monthly press conference.
However, he did say that he was confident the Fed still supported a strong dollar, despite reports that the second round of quantitative easing was designed to weaken the US currency, in order to make its exports more competitive.
"I have no indication that would change my trust in the fact that [Fed policymakers]... are not playing the strategy of the weak dollar," he said.
"It is in the interest of the US to have a strong dollar vis-a-vis the other floating currencies."
'On the hoof'
The latest move by the Fed has been dubbed QE2 as it follows the central bank's decision to pump $1.75tn into the economy during the downturn in its first round of quantitative easing.
Rob Carnell, chief international economist at the banking group ING, said the action was unusual because the economy is in a completely different shape to how it was before.
"[During the first round of QE], you had massive financial market disruptions - really serious problems, mortgage yields and rates were shooting through the roof, no one could borrow. That's clearly not the case right now," he told BBC World Service.
"The justification for it seems to have utterly changed... It's really policy on the hoof, trying to justify it as they go along."
Source: BBC
www.bbc.co.uk
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