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| Date: October 19, 2010 | Source: AlertNet |
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Loading ... China has moved tab in the currency war, even if it was with a modest rise in interest rates (0.25 points to 5.56%) . The increase represents an attempt by the Chinese authorities to control inflation and reorder their own economic growth. The move could weaken the dollar against the yuan and China decide to allow the most favorable exchange rate between the dollar and the euro.
The Chinese central bank has raised rates for the first time in nearly three years, a move that has surprised the market, at least in the fact of having done so quickly, since, as noted by Marian Fernandez, head of strategy Inversis Bank "the tendency was suspected that it would produce, after having recorded the monetary aggregates and real estate prices over the schedule." After the surprise move could be some data on GDP and inflation will be announced this week that higher than expected.
The rate hike has been taken by surprise to the markets, which have reacted to the floor. The bags, oil and gold fell after the announcement by the Chinese central bank. At the same time, the dollar rose and acted as a refuge by the tightening of monetary policy of the Asian giant.
"Externally (is) a message clear to the international authorities on the relative stability of the yuan, "says a recent Citigroup report, adding that can accentuate the rise of the yuan. However, Citi also clarifies that the rate increase is too small to rise to great changes and disturbances. Among other things, debt sales are "light" and the situation remains "unchanged in the European country risk." Meanwhile, Marian Fernandez is skeptical about the yuan as the currency is tapped, "out of a free float."
By contrast, Alexis Ortega, managing partner of Finagentes says that "the yuan should be strengthened. This is a continuation of an ongoing process of "depreciation of the dollar, especially against the yuan." Thus, the Chinese authorities "accept" a weaker dollar against the yuan, but "decide" the exchange rate dollar / euro European currency, according to Ortega, it should not fall below $ 1.35.
"The medium-term passes a falling dollar and a cast of his fall between major currencies (euro, yuan, yen)," said Ortega. "The euro will have to bear the cost." With less intervention of the authorities, "the market more flexible is the euro". In addition, China has been buying European debt, according to the expert Finagentes, which would explain the improvement of the bonds of some countries such as Ireland, despite having suffered downgrades.
In this sense, the euro currency has been the most vulnerable among the major world currencies. In the current scenario of currency war, the EU has remained on the sidelines. As a result, the euro has appreciated against other currencies, causing a detrimental effect on exports from the Old Continent.
From recent months, China keeps its currency artificially low, encouraging exports and hurting the trade balance of countries like the U.S. and Japan have launched a counter protectionist passing through the devaluation of their currencies. Pressures on China resulted in small revaluation of its currency this summer, something judged as insufficient by the United States.
Control of inflation and growth reordering
But the rise in rates has an obvious interpretation in internal key. Although the Chinese authorities had declared their confidence in controlling inflation, the next data, which will be known on Thursday, may yield a figure higher than expected. In August, China's annual inflation was 3.5% and analysts expect an increase to 3.6% in September.
Meanwhile, China's GDP grew by 10.3% in the second quarter. Data for the third quarter, also published this week, may show signs of overheating of the economy that contribute to a rise in prices.
In this sense, the measure of the Chinese authorities would seek to "avoid asset bubbles," says Marian Fernandez. It would also be "adjusting their growth," so far focused on external demand, with a very positive trade balance result of a relatively low yuan. In this sense, the rise in interest rates is also aimed at domestic demand and should encourage the return of investors to the country.
| Date: June 5, 2010 | Source: Sources |
Go ahead and rate this post Loading ... The fragile financial situation of Hungary, alarm bells ringing does not rule out another crisis to the Greek. Problems of Hungary raised the risk of investing in Spain, the differential with the long-term German debt approached 200 basis points - and the Spanish bond yields exceeded 4.5% at closing.
The collapse of the value of the euro to $ 1.2, its lowest level in five years, and the fall of Wall Street by the poor reception given to U.S. unemployment data May encouraged the punishment suffered yesterday in the Spanish stock market a very black day, driving down the Dow to its lowest level in 12 months down to 8,923 points with a 5.32% weekly.
A renewed fears of a European debacle did not help the reduction of recommendation from HSBC for the stock on the continent.
One must go back to May 2009 to see the Ibex 35 below 9,000 points. Gone is the brilliant recovery experienced by the Spanish stock market in the second half he pulled himself to 12,000.
| Date: April 17, 2010 | Source: Sources |
Go ahead and rate this post Loading ... The Greek debt crisis has exposed the weaknesses and anomalies of the euro , starting with not foresee a scenario of bulky default and the predominance of speculative forces. This is Europe to the brink of a chain reaction that can cause the fall of successive major economies like Portugal, Italy and Iceland. And all by having a currency that is tied up.
Therefore, Morgan Stanley has warned that to avoid a fatal chain of events, the most practical is to request a withdrawal from Germany of the euro, since it is the axis of conflict. In a recent article , I made a comparison of debt dispute between China, U.S., Germany, Europe. If the U.S. pressure on China to revalue the yuan, why not press Europe to Germany to get out of the euro and revalue its own currency?
Follows more closely the original source of this post here .
| Date: October 30, 2009 | Source: AlertNet |
Go ahead and rate this post Loading ... The economic crisis, which has made Spain one of its scapegoats, opened the debate on whether to remain within the single European currency. The Nobel Prize in Economics in 2008, Paul Krugman, who does not believe in any case the departure from Spain's Euro-and pointed in a article in January that membership of the common currency was proving detrimental to our country.
This week, the American economist had an impact on the same issue , noting that the euro "raises serious problems for depressed regions of Europe and Spain." Krugman alternatives for Spain reduced to one: a strong "internal devaluation", with cuts in wages and prices.
There is another possibility: the abandonment of the euro and submitting the new currency at a competitive devaluation. The output of the euro would be a disaster for Spain. Roberto Ruiz, head of strategy at UBS Wealth Management Research shows overwhelming. Not even a competitive devaluation of the currency would have the desired effect of reviving imports. The output of the single currency would be made unilaterally because, as recalled by the head of UBS, "there is no mechanism for any country to be expelled from the euro".
Gaining competitiveness is the only argument for abandoning the euro. However, the picture is bleak in the light of the figures. "Three out of four quarters of our exports are directed to the European Union," said Roberto Ruiz. The EU imposed tariffs drastically reduce the benefits of currency exchange rate.
THE SPANISH ECONOMY collapse
"Spain has so much money in euros the whole economy would collapse," insists Ruiz. "Spanish banks due to other European banks and the ECB over 400,000 million euros." Thus a 25% devaluation of the euro soar by 100,000 million plus debt. "The Spanish banking system volatizaría." The collapse also reach Spanish companies whose bonds issued loans totaling more than 100,000 million. The catastrophe would spread like an epidemic in the European financial fabric. "The German banks, whose loans to banks and Spanish by some 240,000 million, would break by the collapse of Spanish banks," says Roberto Ruiz. "We are very dependent and overseas customers."
The improvement in the external deficit barely be noticed. "Spain's main exports are manufactured goods, intermediate, and the rising cost of imports would bring little benefit," says Ruiz. Only one sector such as tourism, less dependent on investment, could benefit from an eventual devaluation.
MAJOR CHALLENGES OF FINANCING AND CAPITAL FLIGHT
"Being outside the European Union could jeopardize Spain's rating and raise the deficit and debt. Would increase the cost of financing, "says Juan Ramon Charity partner of Atlas Capital.
Charity does not see little advantage in a departure from the single currency. "The competitive devaluation of the currency could give short-term oxygen and allow more flexibility in the types." However cause a "probable rise in inflation" that would require increasing the rate over the Europeans.
Nor is it a good choice out of the euro for Marian Fernandez, head of strategy Inversis, who almost completely discarded that possibility. The Inversis expert warns of a downward revision of the rating and the danger of capital flight. This drop will affect the rating of the fixed income market. However, "in the bag there is no direct impact on the limited representativeness of the bag with the Spanish economy." Still, Juan Ramon Charity understands that "at first, for the foreign investor could lose the Spanish stock market attractive for currency."
THE EURO HAS INJURED IN SPAIN?
A report from AIG last year openly advocated the abandonment of the euro. The chief strategist at Banque AIG, Bernard Connolly, considered that membership of the euro had not been beneficial for Spain in the growing season and is the biggest drag out of the crisis.
Connolly argued, similarly to Krugman, that membership in the European Union prevents further lowering of interest rates, ECB-competition, the budget deficit limit imposed by Brussels constrains an increase in public spending or a tax that, according to analyst AIG, would be convenient, and a devaluation of the currency seems unthinkable.
The last annual report of the European Commission on the European single currency revealed that since the adoption of the euro, Spain has lost 20% of their price competitiveness while Germany has gained 13%. The ECB's performance depends much more on the evolution of German and French economies of the Spanish, whose weight in the whole EU is much lower than that of the great European locomotives.
Thus, Spain has been affected by low interest rates have triggered a massive debt when it suited a tighter monetary policy. Instead, the likely solution to the crisis in Germany and France before Spain, would force a rate increase to recover bad Spanish.
Juan Ramon Charity admits that the ECB's policy has been detrimental to the interests of Spain, but remember that our country has enjoyed cohesion funding and other support seem to forget. It also denies that the euro has burdened Spain competitiveness relative to Germany: "Germany has a very diversified economy, while Spain is much more dependent on banks and construction." On the contrary, in the opinion of expert Atlas, belonging to the euro has allowed Spain to stability in the currency that was lacking.
Roberto Ruiz also see more benefits in these years of membership of the euro, despite the dependence of the ECB: "The euro dampens the shocks that have suffered economies like Iceland, Latvia and Lithuania". Marian Fernandez also points out that the Nordic currencies in the crisis suffered "huge losses" because they lack the shelter of a currency like the euro.
The downward adjustment of prices and wages, LIKELY SCENARIO
The apocalyptic cons of leaving the euro leave Spain headed for a severe devaluation of wages and prices ... or immigration. Another possibility, probably the best, is an absolute change of the production model. As Marian Fernandez said: "What you need to do is take advantage of good times to make structural reforms." But when the crisis was installed in the economy had not undertaken any reform.
So, Marian Fernandez points out the need for "adjustment via prices," something that should have been stronger. Inversis analyst considers "amazing" that no one has come down more virulent especially in real estate sector.
Structural changes have been postponed and a solution of this type require years. The government has already scored a paradigm shift in economic development. However, the main measures taken have led to increasing public spending in the construction sector, the traditional hub of the Spanish economy.
| Date: March 22, 2009 | Source: Economic @ 21 |
Go ahead and rate this post Loading ... REFERENCES
EURIBOR
On 5 March, the ECB announced further rate cuts in the eurozone to 1.5%, though it seems that in the short term there will be further cuts as his last words suggests, this makes the descents of the Euribor increasingly less deep, meeting ground close to it.
In the week we correspondel Euribor hits new record low, closing the week at 1.87%, down slightly from 1.92% last week in reference to a year. In all likelihood, March is the first history month Euribor to close below 2% and close to 1.90% ..
The citizen review mortgaged means that its economy will soon get a break after noting strong sales in your mortgage that can be achieved and in many cases exceed 300 euros on the revision of a year ago.
INFLATION
The Index of Consumer Prices (HICP) or Harmonized Inflation (measured in the same way in all countries of the Euro zone), in Spain fell in February tenth , to put the annual rate of 0.7% since marked 0.8% in January, thus continuing the path of moderation in prices that began in July 2008 as the leading indicator developed by the National Statistics Institute (INE).
It will be a new low since June 1969 confirmed the definitive national data of inflation to be published on 12 March.
BRENT AND TEXAS
Week of strong rises in oil prices on both sides of the Atlantic.
Meanwhile, a barrel of Brent for delivery in April goes up to $ 51.40 per barrel, representing an appreciation of 15% from the $ 44.71 weekly for the previous week.
Its counterpart, the barrel of West Texas Intermediate for April delivery also makes a similar behavior after closing at $ 52.02 weekly per barrel, when just last week at $ 45.73.
For details of the listing click here .
EURO / DOLLAR
Last week we attended and recovery of the Euro against the Dollar, but this week seems to take hold this upward trend, after trading $ 1.35 per euro, a rise in the euro / dollar 4.6%, mainly due to the less aversion to risky assets in the U.S. to stock up, as well as positive statements by the Fed to encourage exchanges.
Other changes of exchange here .
BAG
Stock markets around the world continue with the recovery trend that began last week, following the improvement of health of the banking sector.
The IBEX 35 recovered positions and closed the week at 7,710 points, up to 4% next week. Dow Jones also manages to maintain a positive balance the week closing at 7278.38 points the, albeit with a differential of less than 1% due primarily to return to the red of the last day of the week, probably on profit-taking day.
However, do not let your guard down because many experts believe that, although it seems that the worst of the banking sector is already happening, the second wave of the crisis is yet to come, and it is caused by the fall in production industry and the sharp increase in unemployment generated in the first phase.
Optimists believe that in late 2009 and early 2010 we will begin to feel symptoms of global improvement, although the pessimists believe that the crisis will not begin to subside until at least 2012.
| Date: March 14, 2009 | Source: Economic @ 21 |
Go ahead and rate this post Loading ... REFERENCES
EURIBOR
On 5 March, the ECB announced further rate cuts in the eurozone to 1.5%, leaving the door open to further cuts in the future ..
For its part, the Euribor reached lows that marked the ground breaking in March 2004, closing the week at 1.923% in reference to a year. In all likelihood, March is the first history month Euribor to close below 2% and probably checking monthly lows.
The citizen review mortgaged means that its economy will soon get a breather after rebate on your mortgage note you can reach and exceed in many cases compared to 300 euros a year earlier review.
INFLATION
The Index of Consumer Prices (HICP) or Harmonized Inflation (measured in the same way in all countries of the Euro zone), in Spain fell in February tenth , to put the annual rate of 0.7% since marked 0.8% in January, thus continuing the path of moderation in prices that began in July 2008 as the leading indicator developed by the National Statistics Institute (INE).
It will be a new low since June 1969 confirmed the definitive national data of inflation to be published on 12 March.
BRENT AND TEXAS
A barrel of Brent for April delivery remains with weekly closing levels similar to the previous trading day at $ 44.71 a barrel compared to $ 44.80 per barrel which closed the previous week.
Its counterpart, the barrel of West Texas Intermediate for April delivery also maintains similar levels to last week, although over a week has come to touch the $ 48, finally closing at $ 45.73.
For details of the listing click here .
EURO / DOLLAR
It seems that the Euro regains strength and evaluated against the dollar, reaching a change of $ 1.29 per euro traded, probably due to a lower aversion to risky assets in the U.S. before a rising share price and the publication of financial figures better than expected.
Other changes of exchange here .
BAG
European and American markets have seen this, a week of hope and return of money from investors, who seem to wonder if you have already touched ground. The better economic figures than expected especially in the financial sector have enabled the major indices make a recovery week on falls in the preceding weeks.
In turn, the IBEX 35 (main benchmark of the Spanish market) back 7.07%, the biggest gain of the year (increase not seen since 4 months), recapturing the 7427.8 points after hitting a ground in the same week on 6,800 points.
The highest increases of the week the head of the banking sector by improving economic news which predict that the worst for this sector has already been passed. In any case, investors remain cautious until we see how the sector begins to consolidate gains.
The Dow Jones also does a weekly gain of 9% rise in most years, reaching 7223.98 points.
