Posts Tagged ‘ Global ’

Their territories brave victory, which in the global “currency war” is no exception.

Local time on October 28, Brazilian Finance Minister Mantega Brazilian newspaper in an interview that Brazil plans to next month’s Group of 20 (G20) meeting was proposed by the International Monetary Fund (IMF) to create a use to measure the index of exchange rate manipulation.

Mantega said that the index will be used to identify which countries their exchange rate artificially low to boost exports, currency manipulation by countries are considered the need to reduce interference, or the World Trade Organization (WTO) would then be able to its “illegal subsidy” to the sanctions .

He said, “WTO is actually a business that is manipulating the exchange rate subsidies, (countries) must avoid such acts, otherwise they will be met with sanctions.”

Mantega also to Japan and Korea, for example, that countries are taking steps to let its currency depreciate. However, criticism of the developed countries in the monetary policy, exchange rate Mantega also fierce battle front war, and so far has yielded fruitful results.

TCW Chief Global Strategist Komal Sri-Kumar told this reporter last week, the exchange rate G20 countries promised not to fight the war, many finance ministers have hinted this week will further intervention in foreign exchange markets, which means that the exchange rate will continue for the next war.

Brazil: Brazilian real against the dollar’s gains reversed

Competing in various countries to devalue the exchange rate war, Brazil has always been at the forefront of the fighting.

A month ago, Mantega publicly declared that war had broken out of global currency, language shock the world. He said the national currencies generally weakened the competitiveness of Brazil’s threat.

This year in mid-June to October, the Brazilian real against the U.S. currency rose as much as 12%. Together with the U.S. benchmark interest rate close to zero compared to the benchmark interest rate up to 10.75% in Brazil.

Coupled with high interest rates and currency appreciation, international investors in the carry trade have the influx of Brazil. Brazil’s central bank website based on the data flow to Brazil in September this year, fixed-income market size up to 24.1 billion in January this year four times. This further exacerbated the real upward trend.

Brazil’s central bank and the Ministry of Finance work together, and take strong countermeasures.

Brazil’s central bank in September bought a total of 4.2 billion, but in order to further weaken the dollar, as of October 15, the scale of the Brazilian central bank dollar purchases have risen to 108 billion U.S. dollars.

Oct. 5, Brazilian Ministry of Finance, the foreign investors to buy its fixed-income tax rate from 2% to 4%. Two weeks later, the government further increased the rate to 6%.

Mantega October 18, said foreign investors to buy fixed income tax rate may further improve the future, and Brazil is also considering other measures to ward off the hot money into Brazil.

Bank of America, a study in the day quips, the Brazilian government can not resist the developed ultra-low interest rates, “it is impossible to fight a war.”

But two weeks time, however, Wall Street to change its position.

“Mantega very hard to fight and win the struggle.” Citigroup Latin America strategist Dirk Willer said recently, “If you and him fight, you need to know what he will do next. Mantega people I believe he will continue to have new tactics to appear, so you do not know when in the end is the end. and this has completely changed the market psychology. “

Since from October 13, the real depreciation of the dollar began to accelerate, has been devalued by about 3%. Since this month, the real 16 major currencies on the global decline of 0.5%. This is since January this year, the real first time on the world’s major currencies fell.

This also means that the initial government interventions have been effective. Brazil’s stock exchange data show that international investors last week, a total of $ 4,000,000,000 cut to do Duo Baxi market positions.

October 25, he said the recent performance of real good, if necessary, the future will use more weapons to organize real prices.

Japan: embracing quantitative easing in the second quarter

There will be winners on the battlefield there are losers.

Mantega naming the foreign exchange market intervention in Japan and Korea, but so far, the two efforts to weaken the currency did not get good results.

September 15 this year, the Japanese foreign exchange market sell-off in about 2 trillion yen buying dollars, which is the first time since 2004 the Japanese intervention in the foreign exchange market.

But since then, the yen continued to rise against the U.S. dollar still has now risen 4.7%, creating a 15-year high, and has been near record levels.

South Korea Planning Minister Yoon Jeung-hyun said this month that the Government is ready to inhibit the inflow of capital, including taxes on foreign bond investors.

Interestingly, the Japanese intervention in the Republic of Korea is also very dissatisfied with Japan’s Finance Minister Ye Tian Jiayan October 13 accuse South Korea “on a regular basis to intervene in foreign exchange to the country’s position as Chairman of G20 is facing serious questions.”

For Japan’s intervention, wild Tianjia Yan argues that Japan’s foreign exchange market intervention to limit excessive volatility in the yen, with Korea and other economies have taken the essential difference between regular intervention.

But Japan’s “occasional” intervention, after all, results are poor, they also began to consider adjusting the strategy.

October 28, the Monetary Board reiterated the Bank of Japan to maintain the current benchmark interest rate close. Fang Ming Sea of Japan central bank governor also said that if the economy deteriorated, the Bank of Japan may further consider expanding the current 5 trillion yen in assets purchase program.

Meanwhile, the Bank of Japan announced that its next monetary policy meeting ahead of time 11 days to November 4th, the day after the Federal Reserve monetary policy.

The market expected the Fed will start in the November 3 second round of the quantitative easing policy, announced that the next few months to buy hundreds of billions of dollars in assets. Bank of Japan monetary meeting time to adjust, allowing them the quantitative easing policy of the United States after the publication of a timely response to any market fluctuations.

If the yen hit a record high against the dollar, the Bank of Japan will be more difficult to control the yen. Wall Street joke that has to determine the yen the dollar is mainly to see what the country’s “money machine” even more.

In the last weekend G20 meeting of finance ministers and central bank governors, countries pledged to avoid competitive currency devaluation, and guard against excessive volatility and disorderly exchange rate changes.

Ye Tian Jiayan Japanese Finance Minister, said he believes that “alert” means that countries will pay close attention to market trends, if necessary, to continue to take appropriate coordinated actions.

Bank of New York Mellon currency strategist Neil Mellor also called for US-Japan coordination of actions send a strong signal to the outside world that they are willing to abide by the commitments G20.

Mellor said it is considering the U.S. Treasury to buy U.S. dollars when shot, and now close to a record low dollar against the yen, which support the dollar for the government actions to reverse the trend of providing opportunity.