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Tue, 25th April 2017

Anirudh Sethi Report

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Archives of “World currency” Tag

Forex reserves increase by $889.4 mn to $369.887 bn

India’s foreign exchange reserves rose by USD 889.4 million to USD 369.887 billion during the week ended April 14, helped by increase in foreign currency assets, the Reserve Bank said.

They had declined by USD 956.4 million to USD 368.998 billion in the previous reporting week.

The reserves had touched a life-time high of USD 371.99 billion in the week to September 30, 2016.

Foreign currency assets (FCAs), a major component of the overall reserves, surged by USD 881 million to USD 346.248 billion in the reporting week, RBI said.

Expressed in US dollar terms, FCAs include the effects of appreciation/depreciation of non-US currencies, such as the euro, pound and the yen, held in the reserves.

Gold reserves remained unchanged at USD 19.869 billion, the apex bank said.

The special drawing rights with the International Monetary Fund was up by USD 3.1 million to USD 1.446 billion.

India’s reserve position with the Fund, too, rose by USD 5.3 million to USD 2.323 billion, RBI said.

India : Forex Reserves Fall By $935.2 Million To $359.67 Billion

India’s foreign exchange reserves declined by $935.2 million to $359.671 billion in the week to December 23 on account of fall in foreign currency assets, the Reserve Bank said on Friday.

In the previous week, the reserves had fallen by $2.380 billion to $360.606 billion.

They had touched a life-time high of $371.99 billion in the week to September 30, 2016.

Foreign currency assets (FCAs), a major component of the overall reserves, dipped by $933.2 million to $335.970 billion in the reporting week.

FCAs, expressed in US dollar terms, include the effects of appreciation/depreciation of non-US currencies such as the euro, pound and the yen held in the reserves.

Gold reserves remained steady at $19.982 billion in the reporting week, the RBI said.

The special drawing rights with the International Monetary Fund decreased by $0.9 million to $1.427 billion, while India’s reserve position with the Fund too declined by $1.1 million to $2.290 billion, the data showed.

Bitcoin trade volume hits record in November

A record 174.7 million bitcoins changed hands, so to speak, in November, a 50% or so increase from the previous month’s trade volume, according to Bitcoinity.org.

The spike came as Chinese jumped into the digital currency as a way to shift their assets into dollars.

 The previous monthly record, which came in March, was 148.6 million bitcoins.

The November trading volume was worth $137 billion.

The yuan has been weakening against the U.S. currency since Donald Trump’s victory in the presidential election on Nov. 8.

Many Chinese evade restrictions on directly buying dollars by taking a detour into bitcoins. This is what they were doing last month.

India : Forex reserves dip by $1.5 billion to $366.13 billion

India’s foreign exchange reserves declined by USD 1.506 billion to USD 366.139 billion in the week to October 14, due to fall in foreign currency assets, the Reserve Bank said today.

In the previous week, the reserves had decreased by USD 4.343 billion to USD 367.646 billion.

It had touched a life-time high of USD 371.99 billion in the week to September 30, 2016.

Foreign currency assets (FCAs), a major component of the overall reserves, dipped by USD 1.486  .. 

FCAs, expressed in US dollar terms, include the effect of appreciation/depreciation of non-US currencies such as the euro, pound and the yen held in the reserves.

Gold reserves remained steady at USD 21.406 billion, the apex bank said. 

The special drawing rights with the International Monetary Fund declined by USD 8 million to USD 1.468 billion, while India’s reserve position with the Fund dipped by USD 12.8 million to USD 2.356 billion, RBI said. 

India’s forex reserves soar by $ 1.347 billion to $ 367.169 billion

Maintaining an uptrend for the fourth consecutive week, India’s foreign exchange reserves soared by $ 1.347 billion to $ 367.169 billion in the week ended August 19, the Reserve Bank of India (RBI) said here today.
 
The country’s forex reserves had increased by $ 73.2 million to $ 365.822 billion in the previous week.
 
 In its weekly statistical supplement, the central bank said that foreign currency assets, which constitute a major chunk of the forex reserves, had, risen by $ 1.316 billion to $ 341.675 billion during the week.
 
Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, pound and yen held in the reserves.
 
According to the bulletin, the country’s gold reserves remained changed at $ 21.584 billion while its special drawing rights  went up by $ 11.8 million to $ 1.497 bilion.
 
India’s reserve position in the International Monetary Fund (IMF) rose by $ 19.2 million to $ 2.411 billion, the bulletin added.

China marks time in march toward international yuan

In the year since China’s surprise devaluation of its currency, the yuan’s troubles going global have become all too apparent.

With the yuan continuing to lose strength as the Chinese economy slows, Chinese authorities have become reluctant to further expose the currency to market forces — a step necessary to achieve true reserve currency status.

 Last month, the People’s Bank of China gathered local bank executives here for a meeting to inform them of de facto regulations on transactions that could facilitate capital flight. Officials from the central bank reiterated administrative guidance on a prior reporting requirement for large foreign-currency purchases or outbound fund transfers by corporations.

This guidance would not be put in writing, but banks were expected to comply, the officials said, according to people familiar with what transpired at the meeting. Banks were also instructed not to sell foreign currency to companies not registered in Shanghai.

In its 2016 report on internationalizing the yuan, released Wednesday, the PBOC hails rising cross-border transactions and the currency’s progress toward global status. The Chinese leadership, under President Xi Jinping, has set a goal of having “a convertible, freely usable currency” by 2020.

But in a seeming contradiction to this aim, the central bank early this year introduced nationwide restrictions meant to block capital outflows, and has since tightened them. The yuan has been hit with bursts of activity that appear the work of short-sellers. Clearly afraid of letting the currency weaken or allowing capital outflows, the PBOC has put a halt to the liberalization on which the drive for a global yuan depends.

India -Forex reserves hit all time high at $365.49 billion (Jumped by 43 billion last week )

Country’s foreign exchange reserves rose by $ 2.81 billion to reach a all time high of $ 365.49 billion in the week to July 29, helped by rise in foreign currency assets, the Reserve Bank has said.

In the previous week, the reserves had dropped by $ 664 million to $ 362.69 billion.

Foreign currency assets (FCAs), a major component of the overall reserves, rose $ 2.79 billion to $ 341.04 billion in the reporting week, as per RBI data.

FCAs, expressed in dollar terms, include the effect of appreciation/depreciation of non-US currencies such as euro, pound and yen held in the reserves.

Gold reserves remained unchanged at $ 20.58 billion.

The country’s special drawing rights with International Monetary Fund increased by USD 8.5 million to USD 1.48 billion while the reserve position rose by $ 13.6 million to USD 2.39 billion, RBI said.

China Moves Forward With SDR Issuance In August

IMF Managing Director Christine Lagarde speaks at the 40th anniversary
of the IMFC meeting at the IMF Headquarters in Washington, April 20, 2013.

When Bloomberg reported late last year that China founded a working group to explore the use of the supranational Special Drawing Rights (SDR) currency, nobody took heed. 

Now in August of 2016, we are very close to the first SDR issuance of the private sector since the 1980s.

Opinion pieces in the media and speculation by informed sources prepared us for the launch of an instrument most people don’t know about earlier in 2016. Then the International Monetary Fund (IMF) itself published a paper discussing the use of private sector SDRs in July and a Chinese central bank official confirmed an international development organization would soon issue SDR bonds in China, according to Chinese media Caixin.

Caixin now confirmed which organization exactly will issue the bonds and when: The World Bank and the China Development Bankwill issue private sector or “M” SDR in August.

The Emerging Market Heat Map Is Flashing Red; Here’s Who’s In Trouble

Things were already bad enough for emerging markets going into August. Persistently low commodity prices, slumping demand from China, depressed global trade, and a “diminutive” septuagenarian waving around a loaded rate hike pistol in the Eccles Building had served to put an enormous amount of pressure on the world’s emerging economies. And then, the unthinkable happened. No longer able to watch from the sidelines as the export-driven economy continued to buckle from the pain of the dollar peg, China devalued the yuan. What happened next was nothing short of a bloodbath. In short, the devaluation drove a stake through the heart of the EM world by simultaneously i) validating concerns about weak Chinese growth, thus guaranteeing further pressure on commodities, ii) delivering a staggering blow to the export competitiveness of multiple emerging economies, iii) depressing demand from the mainland by making imports more expensive.

While virtually no emerging economy has escaped the pain, some countries have suffered more than others due to their particular sensitivity to trade with China and idiosyncratic political circumstances. One of the hardest hit EMs has been Brazil, and to be sure, we haven’t been shy when it comes to documenting the country’s troubles, which can be summarized as follows: 1) twin deficits on the current and fiscal accounts, 2) political deadlock which makes closing the budget gap with austerity next to impossible, 3) a plunging currency, 4) the worst stagflation in over a decade, 5) a recession that’s projected to last for many quarters to come, 6) street protests, 7) a President with an 8% approval rating, 8) an embattled finance minister, 9) allegations of government corruption. And we could go on.

Given the above, we weren’t surprised to see Brazil at the top of RBS’ EM heat map which is presented below and should serve as a helpful guide to who’s hurting the most in the wake of China’s “surprise” entry into the global currency wars.

Former IMF economist Stephen Jen Says Emerging Market Currencies To Crash 30-50%

The country, which is also coping with twin deficits and a terribly fractious political environment, is at the center of what Morgan Stanley recently called “a triple unwind of EM credit, China’s leverage, and US monetary easing” and now that its most critical trading partner has officially entered the global currency war, all roads lead to further devaluation of the faltering BRL. 

And it’s not just the BRL. As Bloomberg reports, former IMF economist Stephen Jen (who called the 1997 Asian crisis while at Morgan Stanley) thinks EM currencies could fall by an average of 30% going forward on the back of the PBoC’s move to devalue the yuan. Here’s more:  

[The] devaluation of the yuan risks a new round of competitive easing that may send currencies from Brazil’s real to Indonesia’s rupiah tumbling by an average 30 percent to 50 percent in the next nine months, according to investor and former International Monetary Fund economist Stephen Jen.

Volatility measures were already signaling rising distress in emerging markets even before China’s shock move. An index of anticipated price swings climbed above a rich-world gauge at the end of July, reversing the trend seen for most of the past six months.