Thursday, August 6

Tag: Currencies

Could Digital Currencies Make Being Poor Less Costly? – Harvard Business Review
Currencies

Could Digital Currencies Make Being Poor Less Costly? – Harvard Business Review

Executive Summary Right now, more than 70% of the world’s central banks are exploring the merits of central bank digital currencies (CBDCs) — electronic versions of their national fiat. National digital currencies could reduce reliance on commercial banks as the principal interface for money management and increase optionality for consumers, many of whom are beyond the reach of physical bank branches or excluded from the financial system due to poor credit or lack of funds. For CBDCs to open doors to financial inclusion, however, we need universal, open, and user-directed payment networks. For this open peer-to-peer payment infrastructure to develop: 1) governments need to offer regulatory certainty and regulatory sandboxes where projects can be tested, 2) the architects of these networks...
Former PBoC official: digital currency can substitute all currencies
Currencies

Former PBoC official: digital currency can substitute all currencies

In Brief: A former PBoC official believes that digital currency can ultimately be a substitute for all currencies. There are different measurements of currency supply, from M0, M1, to M2. Although a CBDC has its advantages, central bankers are cautious about committing as they want to see who goes first. Wang Yongli, former vice president of Bank of China and a director of the Haixia Blockchain Research Institute, believes that digital currency will eventually replace all cash in circulation and won’t just be confined to M0.  M0 refers to a measurement of the notes and coins in circulation. It’s sometimes referred to as “broad money”. The criteria continues on to M1, cash held in checking accounts, and then M2 where it largely refers to the funds and credit in com...
Swiss Franc: Currency Strength Likely To Prevail – Seeking Alpha
Currencies

Swiss Franc: Currency Strength Likely To Prevail – Seeking Alpha

Last month, the Swiss franc had been rising against the greenback as fears of a second wave of COVID-19 gripped the markets, and demand for safe haven assets grew. Recent Performance On the whole, the growth in the CHF/USD continued into July, and accelerated in the latter half of the month - rising up to 1.0955 at the time of writing. Source: investing.com Much of the reason for the earlier low that we had seen in the franc was related to anticipation that a COVID-19 vaccine would soon be available - which boosted risk appetite in the markets and led investors away from the CHF. Moreover, with European Union talks having finally resulted in an agreement on a recovery fund - this further contributed to a temporary boost in risk appetite. However, this was quickly reversed as the CHF re...
Former China Central Bank Exec Pushes for Digital Currencies – Cointelegraph
Currencies

Former China Central Bank Exec Pushes for Digital Currencies – Cointelegraph

The former vice president of China’s central bank pushed for central bank digital currencies positioning it as a substitute for cash in circulation. Wang Yongli, former vice president of Bank of China and a director of the Haixia Blockchain Research Institute, said digital currencies can certainly be a substitute for cash but it shouldn’t be confined to just that, according to the Global Times. Wang said digital currencies can reshape monetary structures. These can include setting up “basic accounts” for all social entities on a central bank’s digital currency platform. This allows the bank to supervise digital currencies without much impact on the current financial system.   He added a digital currency improves monetary policy effectiveness because the excessive issuance of...
Turkey in 2nd Currency Crisis in 2 Years. Lira Hits Record Low – WOLF STREET
Currencies

Turkey in 2nd Currency Crisis in 2 Years. Lira Hits Record Low – WOLF STREET

Foreign investors are fleeing, worried about surging inflation, deeply negative real interest rates, and a central bank unwilling to crack down on inflation. By Nick Corbishley, for WOLF STREET: The Central Bank of the Republic of Turkey (CBRT) has burned through tens of billions of dollars of increasingly scarce foreign-exchange reserves trying to prop up the lira. It has also borrowed vast sums of foreign currencies from domestic banks and then sold those currencies to buy lira. But to no avail. The Turkish lira is plumbing depths it’s never seen before. This week, it sank to a record low of 8.30 lira to the euro and closed on Friday at 8.25. This three year chart also shows the currency crisis in August-September 2018: In terms of the dollar, the lira had hit a record low on May 8,...
Currencies

Dollar blues: why the pandemic is testing confidence in the US currency – Financial Times

When coronavirus kicked off a historic economic crash and sent stock markets into freefall in March, investors and companies all over the world rushed in to the one currency they trusted above all others: the dollar. Desperate for safety and in need of cash to keep businesses functioning through an economic crisis on an unprecedented scale, they snapped up the US currency wherever they could, sending it racing higher. The scale of the rally — 9 per cent in as many days — was extreme, matching the scale of the crisis. But the move itself was predictable. When the going gets tough, the dollar jumps — a pattern familiar from the 2008-09 financial crisis and in every geopolitical flare-up of recent decades. “If there is turmoil, you want safety,” says Eswar Prasad, a professor at Cornell Un...
Official currencies are no longer a store of value says analysts – Kitco NEWS
Currencies

Official currencies are no longer a store of value says analysts – Kitco NEWS

Investors should brace for the reality that as currencies race to the bottom, the only way to preserve wealth is to buy gold and silver, said analysts at Degussa in a report Thursday. “For long-term oriented investors, gold and silver should be considered not only as liquid but also as risk-reducing and return-enhancing components for the asset portfolio; especially so in times of an unfolding big short in official currencies,” the report said. Gold has rallied to all-time highs, and silver has climbed more than 100% since its March lows; both of these rallies signify that fiat currencies are losing their value, the report said. “While you may well say that the prices of gold and silver are on the rise, it would actually be more meaningful to state that „the purchasing power of offici...
WEEKAHEAD-AFRICA-FX-Zambia’s kwacha under pressure, East Africa currencies steady – Yahoo Finance
Currencies

WEEKAHEAD-AFRICA-FX-Zambia’s kwacha under pressure, East Africa currencies steady – Yahoo Finance

JOHANNESBURG, July 30 (Reuters) - The Zambian kwacha is likely to come under pressure in the coming week as month-end rebalancing sees some selling by corporate investors. In East Africa, currencies are set to remain range-bound. ZAMBIA The kwacha could weaken as companies complete hard currency sales to make month-end payments. On Thursday, commercial banks quoted the currency of Africa's second largest copper producer at 18.2140 from a close of 18.0810 a week ago. "We expect the local unit to face some headwinds in its quest to remain range-bound as big month-end corporate conversions have already been priced in," Zambia National Commercial Bank (ZANACO) said in a note. KENYA The Kenyan shilling is also expected to be under pressure from increased dollar demand from the energy sector ...
Turkey faces currency crisis as lira nears record lows. – The New York Times
Currencies

Turkey faces currency crisis as lira nears record lows. – The New York Times

Turkey was headed toward a currency crisis Tuesday as the value of the lira fell and the country’s central bank appeared to be running out of ammunition to stop its decline toward record lows. The lira was trading at more than 8 to the euro for the first time since a crisis in 2018. The lira was faring better against the U.S. dollar, but analysts said that the central bank was probably running out of reserves to buy lira and prop up its value. President Recep Tayyip Erdogan has battled the economic effects of the pandemic by encouraging banks to increase lending and by pressuring the central bank to keep its benchmark interest rate below the rate of inflation. Those policies have fueled fears of a credit bubble, prompting investors to sell Turkish assets, driving down the lira’s value ...
Dollar move signals new era of weakness for currency, as gold gains – CNBC
Currencies

Dollar move signals new era of weakness for currency, as gold gains – CNBC

The dollar has become the world's punching bag and it's likely to stay that way for awhile.  The world's reserve currency benefited in a big way from a flight-to-safety, which drove it to a three-and-a-half year high in March as the coronavirus pandemic spread to the U.S. Now, as the world's focus has shifted back to fundamentals, the dollar has rapidly slumped to a two-year low. Strategists say the dollar's slide comes as the U.S. lags most of the world in halting the spread of the coronavirus, and some expect the U.S. economic recovery to lag others, including Europe. The dollar is also reacting to the prospect of mounting U.S. deficits and ultra-low U.S. interest rates well into the future.  "The move against the dollar is now broadening, not only more countries, like eme...