Haven Currency - Forex Article

The yen tends to gain during periods of financial stress as Japan’s export-reliant economy doesn’t need foreign capital to balance current accounts -- the broadest measure of trade. The currency has strengthened against all 16 of its most-traded peers this year, strengthening 4.2 percent against the dollar and 6.6 percent versus the euro.

Japanese officials sold at least 14.3 trillion yen this year to stem gains that cut profits for exporters from Toyota Motor Corp. to Nintendo Co., and Finance Minister Jun Azumi has pledged more action. Intervention in 2012 may fail again as financial turmoil attracts investors to the world’s third-most traded currency for its low volatility.

“When avoiding losses trumps profits during a period of risk aversion, low-volatility assets are very appealing,” Masashi Murata, a currency strategist in Tokyo at Brown Brothers Harriman & Co., said in an interview on Dec. 19. “When the U.S. and Europe moved in a bad direction and people wanted to avoid risk, the yen stood as the only currency that had enough liquidity to absorb demand.”

Nokia 700 - If Rumors Could Be Believed!

If rumors are to be believed, Nokia will be introducing the Nokia 700, also known as the Nokia 700 Zeta, in the next few months. In this piece of information, we would be accessing unofficial preliminary specifications of this Nokia mobilephone.

Weighing just 80 grams, the Nokia 700 is believed to be high on appeal, performance, style, and affordability. Its 3.2-inch AMOLED capacitive touchscreen display offers a resolution of 360 x 640 pixels. The Nokia 700 Zeta supports microSD cards to expand external memory and operates on the Symbian Belle operating system and 1GHz processor.

This Nokia mobilephone allows users to stay high on Internet connectivity, seamless browsing, and file sharing with features such as GPRS, EDGE, Wi-Fi 802.11 b/g/n, Bluetooth v2.1 with A2DP - EDR, and microUSB v2.0. The Nokia 700 also has a 5-MP camera that offers a resolution of 2592 x 1944 pixels and comes with LED flash functionality.

Available in red and black colors, the audio and video player of the Nokia 700 Zeta supports the playback of MP3/WAV/eAAC+/MP4/H.264/H.26 format files and delivers crystal clear audio and video solutions. This mobile phone from Nokia has dimensions of 110 x 51 x 10 mm and accelerometer sensor for UI auto-rotate. Moreover, it supports practically unlimited entries and fields with its phonebook and the phone supports the Photocall functionality. It also offers high-end features such as SNS integration, NFC support, Voice memo, and Predictive text input. All in all, the Nokia 700 has all what a mobile user can ask and look for.

Italy Bond Costs Set To Mark New Auction Record

On Wednesday, the five-year borrowing costs of Italy are expected to rise further above 6 percent to mark a new euro lifetime high. This would be at an auction that will provide a first test of bond market sentiment towards the euro zone after EU summit that took place last week.

The yield on the five-year BTP bond Italy will sell on Wednesday topped 7 percent on Monday. Italy paid 6.3 percent in November to sell five-year bonds, which was its highest cost of borrowing since the single currency’s adoption in 1999.

“ECB buying in the secondary market will help, but, if the crisis worsens, it is difficult to see how Italy will retain independent market access in 2012 and help from the International Monetary Fund may at some stage be needed,” Citi analysts said.

FXDD Wins Most Transparent FX Broker

FXDD, a leader in online currency trading services, won the award for “Most Transparent FX Broker” at the 9th Middle East Forex & Investment summit at the Hiltonia Lake Garden, Hilton Hotel in Abu Dhabi, UAE on Tuesday, November 15, 2011.

Some of the world’s leading brokerages and banks competed in the event in nineteen categories that awarded excellence in retail Forex trading.  The company attributes the win to its genuine code of ethics, fair interbank pricing, and strict adherence to regulatory laws.

In attendance to accept the award was Tom O’Reilly, Senior Vice President of Sales at FXDD, and Amgad Attia, Arabic Department Manager at FXDD.

“The award is a testament to FXDD’s excellent reputation and credibility in this region throughout the last five years,” said Amgad Attia.  “Transparency translates to integrity – something that is of great importance in the decentralized Forex market.”

A series of presentations, interactive panel discussions, and case studies that aimed to increase traders’ performances were showcased during the event, including Attia’s outlook on currency markets in light of the global economic turmoil.

FXDD is no stranger to industry awards in the Middle East.  Recently, FXDD Europe was named “Best Trading Platform 2011” at the 1st Saudi Money Expo 2011. In addition, the firm was awarded "Best Forex Broker in Middle East and North Africa (MENA)" and "Best Arabic Platform in MENA” at the 2011 Jordan Forex Expo.

US Dollar declined as Seasonal Forces Taken over Market : Forex

The Australian and New Zealand Dollars outperformed overnight as stocks advanced, pulling the sentiment-linked currencies along for the ride. The MSCI Asia Pacific regional benchmark equity index added 0.6 percent, rebounding from a three-week low reached yesterday. The newswires attributed the move to better-than-expected US economic reports, arguing these boosted the outlook for export demand from the world’s top consumer market. Indeed, the New York Fed reported that manufacturers’ sentiment in its home state unexpectedly rose to the highest in seven months while the Philadelphia Fed’s gauge of business confidence printed at the strongest since April.

Although this narrative is compelling, a different dynamic seems to be at work. Indeed, S&P 500 stock index futures – a go-to proxy for overall risk appetite – found a bottom and began to climb at around 5:30 GMT yesterday, long before the US data set came across the wires (and well ahead of the unexpectedly strong Eurozone PMI figures as well, for that matter). Rather than any specific catalyst, we suspect seasonal factors are behind recent price action. While there has been no meaningful progress on resolving the Eurozone debt crisis or assuaging investors’ general unease with the increasingly dour outlook for global economic growth, there hasn’t been significant deterioration either beyond what investors were already aware of. This means that without fresh kindling to feed fires of risk aversion, a period of profit-taking and consolidation had scope to emerge by default.

The markets find themselves just ten days removed from the Christmas/New Year holiday period observed in most major financial centers, with most trend-defining scheduled event risk between now and 2012 already out of the way. As such, traders have likely turned their attention to squaring their books and starting to pack up for vacations, preferring not to force any major moves or over-commit to their positions until January. On balance, this suggests that barring a major change in the overall landscape (like a credit downgrade of a large European sovereign for example), a corrective bounce followed by consolidative sideways trade is the likely trajectory over the near term.

This is precisely the dynamic expected to be at work into the end of the trading week. The European economic calendar offers only low-tier releases. Elsewhere, US Consumer Price Index figures on tap later in the day are forecast to see both the headline and core inflation rates remain unchanged from the previous month in November, meaning investors are unlikely to derive any new insights vis-à-vis the Federal Reserve policy outlook from the outcome. Meanwhile, S&P 500 futures are trading 0.7 percent into positive territory, hinting the unwinding of risk-averse positions is set to continue to the detriment of the safe-haven US Dollar.

Germany's Opinion on Europe

Inflation fears

Germany's position is defined as much as by what it does not want to do as what it does.

It does not want to let the European Central Bank use its unlimited resources to fund the eurozone rescue fund, and it does not favour pooling the debts of all the eurozone member states together into so-called eurobonds.

On the first point, Mrs Merkel has said she does not want the central bank to rescue governments by printing money.

This is because pumping money into the economy can lead to inflation - and Germany is still scarred by hyperinflation in the early 1920s under the Weimar Republic.

In April 1919, 12 marks were needed to buy one US dollar. By 1923, 4.2 trillion marks were needed.

And this was quickly followed by the Great Depression.

Since 1957, the Bundesbank has targeted inflation to prevent a repeat from ever happening - and was the first central bank to have full independence.

This created one of the most stable currencies in the world - and Germany insisted that the Bundesbank's successor, the ECB, should adopt a similar mandate and also be based in Frankfurt.

In her speech, Mrs Merkel said that "the European Central Bank has a different task from that of the Fed or the Bank of England".

By this, she means that the ECB (and the Bundesbank) differ from the Federal Reserve and the Bank of England in that they are not mandated to be the lenders of last resort - so they don't have to lend when the markets fail.

Nevertheless, the head of the ECB, Mario Draghi, hinted last week the bank might consider some kind of action if policymakers agreed on a "fiscal compact" for the euro area.

There is also talk of the ECB contributing directly to the IMF, which in turn would lend to stricken member states or to the bailout fund.

On the issue of eurobonds, Mrs Merkel called the idea "extraordinarily distressing".

"A joint liability for others' debts is not acceptable," she told the Bundestag. "Eurobonds are not a rescue measure in this crisis."

The German political establishment is loath to get into the idea of the German taxpayer backing the debts of their much less productive neighbours in the south.

"For Germany, it is a morality play," says Mr van Vliet. "They say we did our homework and some countries in southern Europe did not. That is the dangerous game they are playing.

"They want to avoid the moral hazard problem."

Anyway, the German constitutional court said in September that guaranteeing foreign debts would be unconstitutional.

'Right path'

Mrs Merkel has vetoed most of the options suggested by France and other countries like Spain and Italy, which have passed unprecedented austerity reforms.

That leaves everyone else in the eurozone financially desperate, politically weak and looking to Berlin to be told what to do.

And so Mrs Merkel concluded her speech with: "The future of the euro is inseparable from European unity."

"The path ahead is long and it is difficult but it is the right path for the joint good of a strong Germany in a strong European Union, for the benefit of people in Germany and in Europe."

And then she was done, to polite applause.

"If you look at the future, one thing is now we all know what the flaws of the eurozone are," Mr van Vliet says. "The question is whatever they do, will it be enough.

"One thing is that it will never be like what you have in the US - a political union."

In that case, someone has to take charge. For the rest of Europe, this might mean years of being told what to do by the Germans.

Dollar Drops against European Currencies

THE dollar fell almost one US cent as Europe's sovereign debt crisis continued to drag market sentiment lower.

Global markets started the week well after European leaders announced a plan to tighten fiscal rules for the region's economies, at the conclusion of a summit on Friday.

However, the failure to draw up a treaty for the agreement, as well as an uncertain response from ratings agencies, ensured that the optimism was short lived.

"The market is still cautious about buying stocks and buying any risk assets like the Australian dollar,'' Easy Forex currency dealer Tony Darvall said.

At 5pm (AEDT), the local currency was trading at 100.83 US cents, down from 101.69 yesterday.

Since 7am (AEDT) today, the local unit traded between 100.30 US cents and 100.97 cents.

Mr Darvall said currency traders were keeping a close eye on European bond prices, which have been rising since the eurozone summit on the weekend.

"If they continue to widen, then that's going to cause more risk aversion.''

Mr Darvall said the Australian dollar barely reacted to local data today that included National Australia Bank's monthly business survey that showed business conditions improved slightly in November.

Data from the Australian Bureau of Statistics, showing dwelling starts had fallen to their lowest level in two years, had little effect also.

Mr Darvall said investors were now awaiting a monetary policy announcement from the US Federal Reserve's Federal Open Market Committee at 6am (AEDT) tomorrow.

"That could provide some sort of support, but in the short term we are looking for lower levels ... towards parity (for the dollar).

"If that breaks, we'll start to test a little bit lower towards the 99.40 US cents area.''

The Reserve Bank of Australia's trade weighted index was at 75.3 on Tuesday, down from 75.5 yesterday.

At 1700 AEDT, the Australian dollar was at 78.51 Japanese yen, down from yesterday's close of 78.98 yen, and at 76.44 euro cents, up from 76.24 euro cents.

Meanwhile, Australian 10-year-bond futures prices rose to a record high on Tuesday as disappointment set in over the outcome of last week's summit of European leaders.

Australian 10-year bond futures reached 96.175 (implying a yield of 3.825) during intraday trading, their highest yet.

Commonwealth Bank head of debt research Adam Donaldson said the negative sentiment pushed Australian bond futures higher during the local session.

"The big driver of that is clearly the weakness in the equity market and the risk-off flows we've seen over the past day, which is reflecting general disappointment at the progress in Europe,'' he said.

Mr Donaldson said bond prices could continue to rise as investors looked for a safe havens amid worsening global economic conditions.

At 1630 AEDT on Monday, the December 10-year bond futures contract was trading at 96.140 (implying a yield of 3.860 per cent), up from 96.065 (3.935 per cent) on Monday.

The December three-year bond futures contract was at 96.900 (3.100 per cent),up from 96.840 (3.160 per cent).

Forex Trading Rise and rise of citi's star

Few at Citigroup held out much hope when they asked a young Delhi economics graduate to sell foreign exchange products to the British tea companies of Calcutta in 1986. Their lack of optimism reflected Citi’s inability to break into the export market despite a century of operating in India.

But, within eight months of being handed the unenviable task of breaking the stranglehold British banks held over the local tea companies, Anil Prasad and the FX sales team he had built around him became main providers of foreign exchange services to the region’s tea exporters.

That early experience has stayed with Prasad, now Citi’s head of FX and emerging markets banking, the largest franchise of its kind in the world.

Prasad said: “It was the perfect insight into the importance of differentiating your service to meet a client’s individual priorities. I realised that if I could do business with them, I could do business with anyone. If you offer a superior level of service, even in a fully developed market such as FX, you can win business from anyone.”

That Prasad is the only FX chief in the FN100 Most Influential list of investment bankers says a great deal. From London, Prasad oversees 1,500 FX traders and salesmen, servicing 4,000 core banking clients across 81 countries. The scope of his successes – and his challenges – is immense.

After two years spent in his native India, Prasad moved to Citi’s New York options desk. “It was a great time to be in New York,” he recalls. “I learnt to appreciate the important role technology would come to play in improving a bank’s products.”

Prasad remembers pricing FX options contracts using Lotus’s Symphony software suite, in the days before Microsoft’s Excel came to dominate the financial markets. In the 1980s, there was still no accepted method of pricing options. For those able to recognise and realise new, technology-driven applications first in what was still a phone-traded market, Prasad recalls, there were rich rewards on offer.

Then came January 17, 1991 – the night of the first US sorties over Iraq during the Gulf War. Prasad recalls the markets being “very stressed”, decidedly risk-off in tone, with the dollar – then the world’s sole reserve currency and conventional safe haven in times of uncertainty – bid against every major currency pairing.

Prasad thought otherwise. He was of the opinion, he told his trading team, that the risk of a long conflict had been priced far too aggressively into the market by traders, and that the conflict was being inflated by political rhetoric on both sides. Prasad, then 27, and his team took the bold decision to flip Citi’s entire trade book, going short on the dollar and long risk assets.

When the news came back a few hours later, every US jet fighter had made a safe return. Risk assets rallied and the dollar slumped.

Prasad said: “We made a lot of money that night. The market derisked the entire war in one go. I learnt then the importance of always considering a contrarian stance.”

The following year, Prasad was promoted to head of options.

London calling

After a spell in prop trading at NatWest London during the late 1990s, Prasad rejoined Citi in the summer of 2000 as head of local trading for central and eastern Europe, the Middle East and Africa, rising to become head of sales and trading in 2004.

“I actually enjoy the challenge of building a business. It’s ultimately more fulfilling than simply trading,” he said.

In 2007, he was appointed to his current role of global head of FX and local markets. Prasad’s division has not been immune to job cuts in one of the industry’s worst years on record, with Citi making a number of FX trading and sales redundancies this summer, even before widespread layoffs were announced during the final quarter.

But the foreign exchange market – the nervous investor’s first port of call during volatile trading – still accounts for a huge chunk of the bank’s FICC revenues. Cumulatively, those revenues are still the largest on the street, coming in at $14.3bn last year, according to estimates by JP Morgan Cazenove. Citi’s fixed-income revenues also remained resilient during a dire third quarter for most banks.

Overseeing both the emerging market and FX businesses alongside one another has given Prasad a unique remit and a competitive advantage over his peers. Citi broke the mould for high-speed, market-moving research in 2009 when it launched CitiFX Wire, its new client-research portal, hiring journalists in local jurisdictions across dozens of countries to feed intelligence back to its strategic hubs in London and New York.

Bringing the weight of experience to bear on both business lines, Prasad emphasised the importance of having people on the ground in every major client jurisdiction, sizing up liquidity locally rather than from London.

And the approach already looks to be bearing fruit. Citi’s share of the non-financial corporate FX market rocketed by 26% during 2010, according to the annual foreign exchange survey of financial publisher Euromoney.

Plans to seal that dominance with a next-generation cross-asset trading platform, dubbed Citi Velocity 2.0, are already well under way, said Prasad. The platform – offering a host of customisable pre-trade analytics and trading tools for FX and Treasury bonds – will be rolled out to clients globally in January.

Global corporate FX dealing is where Citi remains streets ahead of its rivals, with a market share of 12.67%. The only other bank with a share in double figures is HSBC – another corporate banking giant with designs on becoming a global flow house.

Prasad is not losing any sleep over the competition though. He said: “To do emerging market FX well on a big scale requires more than most banks are willing to invest. It’s difficult to see anyone competing with Citi in a meaningful way in these markets. One of our biggest roles is our advisory capacity, and you need people on the ground in every market to do that. What edge do you have otherwise?

“It’s like servicing the British tea companies in Calcutta. If I offer superior service, I can break into any market.”

currency exchange rate responsive to market

Beijing, Dec 7 (IANS) The exchange rate of the yuan is responsive to market demand and is not being manipulated by the government, a senior official said Wednesday.

Chong Quan, deputy representative for China's international trade talks and former assistant to the minister of commerce, made the remark while talking to reporters at a press conference in Beijing.

'The recent depreciation of the yuan is a good phenomenon. It demonstrates that China's foreign exchange rate is not controlled by the government, as some have claimed,' Xinhua quoted Chong as saying.

Chong said the currency's appreciation or depreciation is responsive to market demand and will float freely with market changes.

Crusade against black money

NEW DELHI: Armed with information on secret bank accounts of citizens from 10 countries, the Finance Ministry on Wednesday said the results of its crusade against black money will be visible over the next five years.

"About 10 countries have provided us automatic information and action is being initiated," Finance Secretary R S Gujral said on the sidelines of an international conference on 'Tax and Inequality' here.

"Yes, it does include banking information," he said, when asked whether the information was about secret bank accounts.

India, he added, was playing an important role at the international fora in highlighting the importance of exchange of banking information and sharing of past data.

The efforts, he said, would take some time to yield results. "The issue of how well it (exchange of banking information) will address the question of black money being siphoned off abroad, I think the next five years will show the results," he added.

Besides, he said, India has "obtained certain information from Mauritius also regarding individual cases which we have asked for and obviously action is being taken on them".

The real issue with Mauritius, he said, was with regard to capital gains tax. India is in the process of revising the tax treaty with the island nation.

"We are seeking to amend 75 of our DTAAs ( double taxation avoidance agreements) and we are seeking to enter into 17 TIEAs (tax information exchange agreements)," Gujral added.

He, however, expressed dismay at the fact that some countries were still not willing to share past information and agreeing for automatic exchange of information, despite OECD (Organisation for Economic Co-operation and Development) pressing for them.

Big bull turns bearish?

NEW DELHI: Billionaire investor Rakesh Jhunjhunwala of Rare Enterprises does not seem to be bullish on the Indian private equity market anymore. Jhunjhunwala is gradually looking to exit his key Private Equity (PE) investments, sources told ET Now.

The exit will be done in a phased out manner over the next two to three years. Jhunjhunwala has started the process by a plan to sell his promoter stake in Aptech, which defined computer education in India. He holds a 35.79% stake in the company which was acquired six years ago.

Investment bank Avendus Capital has approached a list of potential suitors, including TeamLease, a staffing company with interest in vocational education, and Manipal Universal Learning, which is one of India's largest private enterprises focused on education.

The most likely buyers could be international education companies that are hot on Indian opportunities . Aptech may be looking at over Rs 600 crore valuation, or about 14 times its operating profit, which is a premium to the stock market valuation of Rs 461 crore.

The big bull is also likely to exit his investments in companies like Hungama Mobile and sectors like dredging and food & beverages. Jhunjhunwala does not expect big returns from these investments.

Another possible reason for the exit could be his involvement in the day to day affairs of these companies. Being an investor, rather than a businessman, he could also be of the opinion that some of the entrepreneurs that he has dealt with are not willing to scale up.

Jhunjhunwala feels that the private equity market in India is not investor oriented. Sources have told ET Now that Rakesh Jhunjhunwala is likely to maintain his entire focus primarily on his portfolio of listed companies.

His portfolio consists of stocks like Titan, VIP and Provogue. Rare Enterprises officials remained unavailable for comment.

EBusiness Reviews covers debt ceiling 2011

By Pat Williams

December 4, 2011

EBusiness Reviews, a website specializing in reviews of forex trading strategies and business news, announces the release of its review of theObama debt ceiling.

The debt ceiling 2011 crisis, resolved on July 31, 2011 after many months of debate and arguments between the Republicans and Democrats. The Obama debt ceiling resulting in raising the national debt ceiling by US$2.1 trillion to a total of US$16.4 trillion. The US debt ceiling describes amount of public debt that the United States government allowed to incur as part of its regular operations. Investors provide loans to the United States governmentwhen it issues securities or bonds that offer attractive interest rates and the promise of stability. Since the United States is a stable world power, its securities and bonds are popular among investors.

The debt ceiling 2011 is part of a long list of debt ceiling bills of pastgovernment administrations – congress has approved 93 debt ceiling bills since they were introduced by the Public Debt Act which was passed in 1941.

EBusiness Reviews covers the Obama debt ceiling in detail and raises relevant questions about its past and future. The free report is available is available on EBusiness Reviews’ web site.

For more information, visit the company’s web site at EBusinessReviews.net