US Angling to get Chinese to Revalue Renminbi

In what looks to be a central line of attack in the quest to re-balance the global economy, the Treasury Department has ratcheted up the rhetoric against China’s currency peg. The Treasury’s semiannual report to Congress slammed the Chinese for their lack of exchange rate ‘flexibility,’ but stopped well short of accusing the Chinese of […]

Who is Afraid of the Global Rebalancing?

More than the uneventful October ECB meeting, the stream of strong IP numbers in the three largest economies of the area was the real news of last week. As a consequence, we decided to revise up our eurozone GDP forecast for the third quarter. We now see 3Q GDP at 0.4% qoq vs. our previous […]

The Falling US Dollar – Bane or Boon?

Summary:  The US dollar is falling in value vs. most other currencies and gold.  As usual, much of the material in the mainstream media about this important economic trend is misleading or wrong.  It is potentially both bane and boon.  Which depends upon us.  This is just a sketch; please see the links at the […]

Interpreting Recent Movements of the Rupee-Dollar Rate

In recent weeks, there has been a lot of focus on the appreciation of the rupee against the dollar. In an opinion piece in Financial Express today, I point out that the US dollar has fluctuated considerably in the period after September 2008, and interpret the recent events on the Indian currency market. At first, […]

One Way Out

Maybe it was Australia’s decision to hike rates last week, the first monetary tightening among the G20 nations since the financial crisis began. Or perhaps it’s just the recognition of economic fate. Whatever the catalyst, Fed chief Ben Bernanke is now talking openly of the “exit strategy.” “My colleagues at the Federal Reserve and I […]

Spain’s Current Account Deficit Folds in on Itself

Spain’s current account deficit fell to 2.064 billion euros in July from 7.752 billion euros a year earlier as imports tumbled, according to the latest Bank of Spain data. This is a very sharp and dramatic fall, and my guess is that at this rate the gap will close in six months or so, which […]

Currency Futures Liquidity ahead of the Forward Market?

At NSE, currency futures did $1.8 billion yesterday. With this, India is starting to look like a rare country where the turnover of the currency futures market is big when compared with the currency forward market. (Gurnain pointed out, in the comments to this post, that this is the case in Brazil. I’m not aware […]

Vulnerability, Exchange Rate and International Reserves: Whither Brazil?

Bruno Saraiva and Otaviano Canuto [1] Picture a Latin American country sitting on US$350 billion of international reserves, while running current account deficit, fiscal deficit and paying an interest bill on public debt that hovers above 5% of GDP every year. Given the enormous opportunity costs of hoarding such chest of gold, how could that […]

Gold Passes $1,000

Everyone seems to be all atwitter over Gold breaking a $1,000 (again). This is the third time in 18 months that Gold has breached that level, failing the prior two times.    There seems to be an obsession with base 10 numerals, an evolutionary coincidence of the fact we Humans have 10 fingers and 10 toes. […]