Tag Archives: currency

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Azerbaijan Currency Crashes 50% As Crude Contagion Spreads

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Categories: Forex Capital Today, News Flash - Market today, Tags: , , , , ,

OPEC blowback continues to ripple around the world. With Russia’s Ruble pushing back towards record lows against the USD, and Kazakhstan’s Tenge having tumbled to record lows, the writing was on the wall for Azerbaijan. As Bloomberg reports, the third-biggest oil producer in the former Soviet Union moved to a free float on Monday and the manat crashed almost 50% instantly to its weakest on record with the second devaluation this year.

First the Russian Ruble…

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151221_oil2.jpg

Then Kazakhstan’s Tenge…

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151221_oil3.jpg

While Azerbaijan’s former Soviet allies Russia and Kazakhstan have moved to floating currency regimes in the past year, the Azeri central bank has questioned whether the country was prepared for a similar shift. Governor Elman Rustamov said there was no need for another devaluation of the manat, according to a televised interview broadcast on Sept. 25.

And now Azerbaijan’s Manat crashes 50%…

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151221_oil1.jpg

As Bloomberg reports, “It looks like Azerbaijan’s authorities are following Kazakhstan’s devaluation path,” said Oleg Kouzmin, a former Russian central bank adviser who works as an economist at Renaissance Capital in Moscow. “After devaluing the currency once, some time ago, they concluded that the first move was not enough to tackle all the challenges of a weaker oil price environment.”

Azerbaijan relies on hydrocarbons for more than 90 percent of its exports and the manat has lost almost half its value against the dollar this year, the worst performance of currencies globally.

 

The Azeri central bank’s reserves were at $6.2 billion at the end of November, down from more than $15 billion a year earlier.

 

The Russian ruble’s collapse and a 70 percent plunge in the crude price since June last year have ushered in a new era of volatility for Azerbaijan, which is also beset by challenges ranging from declining oil output to a festering conflict with neighboring Armenia.

“The only real surprise is that they waited so long, blew scarce FX reserves in the process, and thereby undermined the sovereign balance sheet and credibility and confidence in the process,” Timothy Ash, head of emerging-market strategy at Nomura International Plc. in London, said by e-mail.

 

 

 

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Definitive steps taken to resolve Euro debt crisis or are we just buying time..again ??

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Categories: News Flash - Market today, Tags: , , , , , , , , ,

The Euro surged 1.1% in its biggest daily jump in eight months. Markets now shift focus to key data releases.

The Euro shot up more than 1% earlier today, on news that European leaders have agreed that Euro zone banks could be recapitalised without adding to government debt. This did much to allay concerns about growing lending pressures in Spain and Italy.

Dollar-based oil, copper and gold recovered as the Dollar retreated following the Euro’s steep rebound.

While the finer details of the agreement are yet to be disclosed, the Euro zone members had agreed to emergency action in order to lower the borrowing costs of Spain and Italy. They reasoned that the Euro area rescue funds could be used to stabilise bond markets without forcing countries that comply with EU budget rules. They also agreed to create a single supervisory body for the Euro bloc’s banks.

Euro area finance ministers will enact the final deal on loans to Spanish banks at a meeting on July 9th.

Both Spain and Italy had been threatened by market pressure which pushed their borrowing costs to unsustainable levels. They blocked a 120 billion Euro ($149 billion) growth package at the start of the two day EU summit yesterday, in order to demand urgent action to calm their financial woes.

The EU Leaders however did not place stress on the possibility of Euro bonds. Europe’s paymaster, Germany, staunchly opposes the creation of common Euro bonds.

While the Dollar retreated against a basket of currencies, the Euro was set for its biggest daily jump in eight months and was at $1.2568 earlier today. The Euro had jumped 1.2% to 100.08 Yen after earlier falling as much as 0.3%. The Yen fetched 79.43 Yen per Dollar.

In Japan, government reports today had shown that its industrial production had slid 3.1% in May from April. This was the biggest decline since March 2011. Japan’s consumer prices declined 0.1% in May.

The Australian and New Zealand Dollars advanced as Asian stocks rose, which boosted demand for higher yielding assets. The Aussie was up 1.5% to $1.0192 and the Kiwi rallied 1.3% to 79.84 U.S. cents.

Analysts now expect that the markets will shift their focus to other key data. The monthly U.S. jobs report is due next week and the official China PMI due over the weekend, with the PMI expected to show that activity at China’s factories fell to a seven month low this month.

Data released yesterday had shown that unemployment climbed in June for the fourth month this year in Germany, the Euro currency bloc’s biggest economy. A report from the EU’s statistics office is due for release on July 2nd and is expected to show that the jobless rate in the 17 nation Euro zone was near 11.1% in May.

Stay tuned for further updates, trade safe!

Erik

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The name of the game is Risk Aversion on Currencies !

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Categories: Forex Capital Today, News Flash - Market today, Tags: , , , , , , ,

Earlier today, the Euro hit its weakest level since July 2010 to the Dollar. This followed a clash between European leaders over joint bond sales at a summit.

The Euro also declined for a third day against the Yen. This as a Euro area report is due, that economists predict will show that services and manufacturing industries have shrunk for a fourth month.

The Dollar and Yen have both climbed as against most of their major counterparts. Speculation still persists that Europe’s debt crisis is deepening and this has boosted demand from investors for safer assets.

The Euro stood at $1.2580 earlier from $1.2582 yesterday, when it touched its lowest level since the 13th of July 2010 at $1.2545. It dropped 0.3% to 99.71 Yen, while the Dollar stood at 79.48 Yen.

Bank of Japan (BOJ) Governor, Masaaki Shirakawa, today stressed the central bank’s resolve to maintain its ultra-loose monetary policy. He ruled out though, any easing solely for the purpose of weakening the Yen.

He went on to say that there was no clear historical evidence, that an expansion in Japan’s monetary base does lead to a weaker Yen. This countered views that the central bank can directly push down the Yen by injecting more money into the economy.

He considered, that the biggest factor affecting currency moves at the moment, is investors’ risk aversion and went on to stress, that monetary policy alone cannot influence Yen moves.

In February, the BOJ had eased monetary policy and set an 1% inflation target. It did so in order to show its determination to beat the deflation that has plagued Japan for over a decade.

The BOJ had followed up with even more monetary easing during April. Since then, it has remained under political pressure for further action to support the economy and counter the hardship resulting from a stubbornly strong Yen.

The BOJ has pledged to pursue powerful monetary easing until such time that an 1% inflation figure is in sight, and will likely continue with its efforts to beat deflation with its key monetary easing tool; its asset-buying program.

On the longer term time line surely the euro will have some export easing benefit from the Euro drop, even so as it continues fall down hill.

On shorter term we still have this contagious crisis…keeps popping out as popcorn on a micro..

I can promise one thing, it is going to be a very HOT summer, did you remember last years summer ?

Yes, same thing just bigger….

All the best!

Erik