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 Post subject: Currency wars: mines worth less than yours
PostPosted: Tue Sep 21, 2010 8:03 pm 
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Brazilian Wealth Fund Dollar Purchases Could Stem Real's Rally, ICAP Says -> http://www.bloomberg.com/news/2010-09-2 ... -says.html

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The wealth fund will add to interventions by the central bank, which bought about $4 billion in the first four days of last week as the real jumped to the strongest since December, according to estimates by BGC Liquidez DTVM, the second-biggest currency broker on Brazil’s futures exchange. The purchases would be the largest over a four-day period since October 2008, when policy makers bought a record $4.6 billion.

Petrobras plans to carry out its share sale Sept. 23.

The real had its biggest drop in almost a month yesterday after the government announced the plan for its sovereign wealth fund. At 8:58 a.m. New York time today, the real exchanged hands at 1.7298 per dollar, a 0.2 percent gain.

‘No Limit’

The fund will have “no limit” on foreign-currency purchases, the Finance Ministry said yesterday in an e-mailed statement, which didn’t say when the fund may start buying dollars. The strategy was approved Sept. 17 by the Finance and Planning ministries and the central bank, the ministry said.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 21, 2010 8:24 pm 
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Economic Crisis Threatens To Unleash Global Currency Wars -> http://www.countercurrents.org/grey180910.htm

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The eruption of currency exchange conflicts is bound up with mounting signs that the global economic crisis is systemic, rather than merely conjunctural, and growing fears that a genuine recovery is not in the offing. The European sovereign debt crisis and the weakening of US economic growth have led governments around the world to seek to secure a greater share of export markets. Under conditions of slowing growth and stagnant markets, this inevitably heightens trade conflicts between competing capitalist nations.

In particular, the US and the European Union, spearheaded by the export power Germany, have aggressively pursued a cheap currency policy in order to gain a trade advantage against their rivals. Of the major economic powers, Japan has suffered the greatest damage from these policies, as investors and speculators have shifted from dollar- and euro-denominated investments to the yen, driving up the currency's exchange rate.

This has embittered relations between Japan and both the US and the EU. Japan has also denounced China for artificially keeping its currency low while bidding up the yen by increasing its purchases of Japanese government securities.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 21, 2010 8:28 pm 
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Currency war likely soon -> http://joongangdaily.joins.com/article/ ... id=2926169

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The yen’s rally is a structural problem. Foreign capital is being lured to the relatively safe yen due to unpredictable economic prospects in the U.S. and Europe. Japan had been able to deal with yen’s sharp rise until recently through yen carry trade, in which investors borrow yen at near-zero yield levels and use the loans to buy higher yielding assets elsewhere, for example U.S. Treasuries. But after the Wall Street-sparked financial meltdown, many other markets offered ultra-low interest rates. The leveraging of yields has stolen the limelight from the yen for such trades. Moreover, if U.S. monetary authorities inject more liquidity and buy Treasuries to stimulate the economy, investors can reverse trade and send the yen higher due to increased demand to pay back yen loans.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 21, 2010 8:35 pm 
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Japanese Dump Gilts for Lula Debt as Interest Rates Top 10%: Brazil Credit -> http://www.bloomberg.com/news/2010-09-1 ... redit.html

Quote:
Japanese investors are pouring more money into Brazilian bonds than any region in the world after Latin America’s biggest economy raised interest rates the most of any nation this year.
Brazilian debt lured a net $7.6 billion from Japanese mutual funds in the first seven months of 2010, more than the U.S., Canada and Australia combined and exceeding the U.K. and Euro region, according to the Investment Trusts Association in Tokyo. In total, Japanese holdings of Brazilian debt rose 53 percent to a record $1.8 trillion yen ($22 billion).
<snip>
Japanese Immigrants
Cultural ties between Japan and Brazil are helping fuel demand for the debt, according to Patria’s Lopes. Brazil has about 1.6 million Japanese or people of the nation’s descent, the biggest community outside of Japan, according to the country’s embassy in Brasilia.
Banco do Brasil SA, Latin America’s biggest bank by assets, has seven branches in Japan and 140,000 account holders, most of whom are Brazilians of Japanese descent, according to Admilson Monteiro Garcia, director of the firm’s international operations. The Japanese first immigrated to Brazil at the beginning of the 19th century to work in coffee plantations, according to the Nippon-Brazilian Studies Center in Sao Paulo.
“The Japanese are comfortable about investing in Brazil because of the immigration, they know the country,” said Patria’s Lopes. “These are not sophisticated investors. They’re just average Japanese trying to manage the household’s funds.”


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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 21, 2010 8:42 pm 
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Swiss firms must live with stong franc - bank lobby -> http://uk.reuters.com/article/idUKLDE68F0YF20100916

Quote:
  • Head of bankers' association says strong franc is to stay
  • Says Swiss industry needs to adapt quickly
  • Says systematic interventions to be challenged by markets

ZURICH, Sept 16 (Reuters) - The Swiss industry needs to swiftly adapt to the strong Swiss franc, as its strength will last and central bank power to intervene is limited, the head of Switzerland's top banking association said. "The Swiss franc has always been a problem in Switzerland and today we have a hiccup which could work to the detriment of some (sectors) of our export industry," Patrick Odier, Chairman of the Swiss Bankers' Association, said on Thursday ahead of a key Swiss National Bank rate-setting meeting.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 21, 2010 10:38 pm 
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It is interesting that QE hasn't had the major inflationary effect that it was thought would occur initially. The next part of the equation appears to be a concerted effort to devalue in an effort to inflate away debts but I can't see how this is going to work if everybody is devaluing, especially if debts are in harder currencies.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 28, 2010 3:21 pm 
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http://www.guardian.co.uk/business/2010 ... rns-brazil
Quote:
World gripped by 'international currency war'
Tuesday 28 September 2010
Tim Webb

• Brazilian finance minister Guido Mantega speaks out against devaluations
• Economists fear increasing currency volatility and instability

The world is in the midst of an "international currency war" according to Brazil's finance minister as governments force down the value of their currencies to boost their struggling economies.

The comments are the first public admission made by a senior policymaker about a practice which has become increasingly widespread since the global economic downturn.

Many countries, notably China, have been deliberately weakening their currencies by selling them on foreign exchanges or keeping interest rates artificially low to make their exports cheaper.

Economists fear that such moves are resulting in increasing currency volatility and instability. Increasing competition among individual countries to devalue also makes it harder to mount a co-ordinated policy response to the economic downturn, particularly amid fears of a renewed slowdown.

.....(cont'd)


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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 28, 2010 4:22 pm 
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With Warning, Obama Presses China on Currency -> http://www.nytimes.com/2010/09/24/world ... ml?_r=2&hp

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UNITED NATIONS — President Obama increased pressure on China to immediately revalue its currency on Thursday, devoting most of a two-hour meeting with China’s prime minister to the issue and sending the message, according to one of his top aides, that if “the Chinese don’t take actions, we have other means of protecting U.S. interests.”
But Prime Minister Wen Jiabao barely budged beyond his familiar talking points about gradual “reform” of China’s currency policy, leaving it unclear whether Mr. Obama’s message would change Beijing’s economic or political calculus.

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Premier Wen expounds "real China" at UN debate -> http://news.xinhuanet.com/english2010/c ... 526690.htm

Quote:
UNITED NATIONS, Sept. 23 (Xinhua) -- China remains a developing country and will stick to the path of peaceful development for the common good of mankind, Premier Wen Jiabao said here Thursday.
"This is the real China," he said in a speech titled "Getting to Know the Real China" before world leaders and delegates at the annual general debate of the UN General Assembly.
CHINA REMAINS A DEVELOPING COUNTRY
While taking pride from the rapid growth and remarkable achievements over the past 30 years, "we are clear-headed about our place and role in today's world," Wen said.
Although China's gross domestic product is the third largest in the world, the per capita figure is only one tenth of that of developed countries, he noted.
China is a leading producer of many important products, but remains at the lower end of the global industrial chain; China is a big trading nation, but its exports are low in technology content and in added value, Wen said.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Tue Sep 28, 2010 4:42 pm 
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China-Russia on Collaborative Moves -> http://topnews.us/content/226739-china- ... tive-moves

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As reported by the official Xinhua News Agency, on Monday, Hu Jintao, Chinese President announced that China would accept Russia's proposal to initiate direct trading between the Chinese Yuan and Russian Ruble.
Hu Jintao said, "China supports the Russian proposal for Yuan-Ruble trading on each country's interbank foreign exchange market".
In its attempt to open up interbank foreign exchange market for the offshore currencies, China also allowed Malaysia's currency Ringgit in August to be a part of the direct trading against Yuan on the interbank market. The other currencies that are in the basket to directly trade against Chinese currency include the U. S. Dollar, the Hong Kong Dollar, the Yen, the Euro, and the Pound.

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 Post subject: Currency Wars!
PostPosted: Wed Sep 29, 2010 9:23 am 
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Quote:
The risk of a global currency war is "low" but cannot be ruled out, IMF managing director Dominique Strauss-Kahn said on Tuesday, following a spate of currency interventions.


Devaluation is the name of the game!

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Thu Sep 30, 2010 8:48 pm 
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U.S. Dollar Is `One Step Nearer' to Crisis as Debt Level Climbs, Yu Says -> http://www.bloomberg.com/news/2010-09-2 ... -says.html

Quote:
The U.S. dollar is “one step nearer” to a crisis as debt levels in the world’s largest economy increase, said Yu Yongding, a former adviser to China’s central bank.
Any appreciation of the dollar is “really temporary” and a devaluation of the currency is inevitable as U.S. debt rises, Yu said in a speech in Singapore today.
“Such a huge amount of debt is terrible,” Yu said. “The situation will be worsening day by day. I think we are one step nearer to a U.S.-dollar crisis.”
Yu also said China is worried about the safety of its foreign-exchange reserves including those invested in U.S. Treasuries as the U.S. currency weakens, reiterating his earlier views on the dollar assets. The U.S. will record a $1.3 trillion budget deficit for the fiscal year ending Sept. 30, the Congressional Budget Office said Aug. 19.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Fri Oct 01, 2010 9:37 am 
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China should not take the medicine for a US illness -> http://www.chinadaily.com.cn/opinion/20 ... 350179.htm

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Today, the US is pressing China to value its currency. It threatens to label China as a country that is manipulating its currency, which will enable the US government to put a high tariff on China's exports to the US Every country in this world manipulates its currency, because it is its currency.

Can the US government say that it does not manipulate its own currency at all? Can the US government name any country in today's world that does not manipulate currency to the best of its interests?

Every country does and should manipulate its own currency for its own benefit and at its own risk. It is not any other governments' business to press another government to value its currency. If we really believe in free market, then let the market do its job. If any government manipulates its currency in defiance of the market, it will be punished by the market in the end. Is not that how the market works?

The American government presses the Chinese Government to value its currency because it felt that the Chinese exports to the US take away the American jobs. It seems that the US government wants the Chinese Government to take the medicine for an American illness.

Its threat to labeling China as a country that manipulates its currency is like finding some unreasonable excuse to have its way like the wolf in the famous fable where the wolf justifies preying on the lamb for polluting its water even though the lamb is down stream.

What the US should do is to solve its unemployment problem by creating more jobs for the American people in America, not forcing China to take the medicine for its sickness. Doing that may hurt China in the short run, but will do the US no good in the long run.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Fri Oct 01, 2010 11:54 am 
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War Has Broken Out And Your Savings Are At Stake -> http://www.zerohedge.com/article/war-ha ... -are-stake

Quote:
The first and most immediate item we need to note is the Bank of Japan’s (BoJ) currency intervention.

Prior to this, all currency interventions were generally indirect (the Fed’s QE program) or not generally promoted (the Swiss banks numerous attempts to buy Euros and suppress the Franc).

In contrast, the BoJ’s move was not only sudden, it was promoted.

Japan Finance Minister Noda: MOF Intervened In FX Markets
Japan's government sold yen Wednesday, pushing the dollar up sharply. It was Japan's first foreign exchange market intervention in more than six years, Finance Minister Yoshihiko Noda said.

Noda said the ministry would take decisive steps, including intervention if needed. He said the intervention was aimed at curbing excessive fluctuations in the foreign exchange market.

Moreover, Japan stated it would:

1) Intervene more in the future if needed

2) Use the funds from the intervention to provide liquidity to the stock markets

The move, while hinted at previously, was a bit “out of left field” (the BoJ had not intervened since 2004). The Japanese Yen is one of the primary carry trade currencies to borrow in (the US Dollar being the other). So Japan’s move was largely seen to be “pro-risk” resulting in the Nikkei spiking.

However, it marks a major turning point in the financial crisis. Going forward, the key issue for the financial markets will be currency interventions. Japan’s move can, in a sense, be seen as an open declaration of war between the BoJ, the Federal Reserve, and other Central Bankers.

Indeed, we can’t leave the European Central Banks out of this. Indeed, the most noted currency intervention prior came from the Swiss Nation Bank which bought Euros by the billions in an attempt to keep the Swiss France/ Euro trade low. And Germany and other European countries want the Euro low to boost their exports.

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Fri Oct 01, 2010 2:58 pm 
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Peter Schiff's explains that currency devaluations are counter productive..
Quote:
Race to the Bottom


Long ago, before economic models developed their current levels of sophistication, it used to be that the goal of a government’s economic policy was to bring prosperity to its citizens; in other words, to raise the general level of material comfort, while at the same time reducing the amount of toil required to attain that end.

However, due to the blather spouted by modern economists, success is no longer measured in those terms. Instead, governments simply look to pump up nominal levels of gross domestic product (GDP), while simultaneously catering to the needs of entrenched political classes. As exports feed directly into GDP, currency devaluation has been widely used as a means to boost exports and therefore achieve ‘prosperity.’ In this model, selling is an end unto itself. There is no focus whatsoever paid to the obviously negative consequences of currency debasement: diminished purchasing power and lowered living standards.

Way back in the 20th century, a nation’s currency was viewed much as a company’s stock price. The reliability, competitiveness, and growth of a national economy usually translated into a strong currency. This system made sense.

Countries that offered the most fertile soil for investment capital or that made products other countries wanted would attract funds from abroad. Demand for the currency of these “blue chip” countries (which was needed to invest or buy locally) would inevitably push up the value of the currency. And so, much as shareholders of successful companies are rewarded by higher stock prices, citizens of successful countries were rewarded with stronger currencies – with which they could buy more goods and services both domestically and internationally, raising their living standards.

But all that has changed in recent years. With a strategy that seems to be taken from the playbook of Sam Walton, governments now look to take market share from competitors by lowering the cost of their exports. To do this, they have adopted a beggar-thyself policy of habitual currency debasement. Although such a move may benefit those who buy the products, it is a burden to the country’s own workers who, like Wal-Mart employees, have to get by on subsistence wages. While the markets like a low-cost provider, this is not a niche that everyone can, or should, fill. While some will compete only on price, more successful ventures will compete on quality and innovation. For every Kia, there is a Mercedes Benz.


http://www.europac.net/commentaries/race_bottom

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 Post subject: Re: Currency wars: mines worth less than yours
PostPosted: Sat Oct 02, 2010 8:59 am 
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Bank of Korea reportedly intervenes to curb won -> http://www.marketwatch.com/story/bank-o ... 2010-09-27

Quote:
TOKYO (MarketWatch) — South Korean authorities bought dollars Monday to curb the won’s rise to a four-month highs, according to reports citing foreign-exchange traders.
The U.S. dollar was buying 1,148.2 won, after falling as low as 1,146.0 won earlier, its lowest since mid-May. The central bank was said to have entered the market around the 1,148.0 won level, and may have bought between 500 million and $700 million.
The Bank of Korea also reportedly took direct market action in the previous session. On Friday, authorities were said to have bought dollars in the range around 1,153.5 won to 1,155 won, in amounts estimated between $300 million and $500 million.
South Korea’s markets were closed last week for the Chuseok holidays from Sept. 21-23. During that time, the dollar weakened against most global rivals on growing expectations that the U.S. Federal Reserve would take additional easing steps.

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Fernandez Makes Peso the Only Loser in Emerging Markets: Argentina Credit -> http://www.bloomberg.com/news/2010-09-2 ... redit.html

Quote:
Argentine President Cristina Fernandez de Kirchner’s efforts to weaken the peso are working, while policy makers in emerging markets from Brazil to South Africa fail to curb currency rallies.

The peso has declined 0.7 percent in the past three months against the dollar, the only retreat among 25 emerging-market currencies tracked by Bloomberg. South Africa’s rand gained 7.9 percent and Brazil’s real rose 4.1 percent even as their central banks stepped up dollar purchases to stem the appreciation.

Argentine central bank President Mercedes Marco del Pont said Sept. 2 that the institution seeks to maintain a “competitive” exchange rate after dollar inflows climbed to a two-year high of $392 million in the second quarter, the second time since 2008 that flows were positive. The bank, which doesn’t target a benchmark lending rate, buys dollars in the local foreign exchange market and limits appreciation by requiring investors deposit 30 percent of the funds brought into the country for one year.

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