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Factbox-Yellen’s watchlist for the U.S. currency manipulator tag

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Factbox-Yellen's watchlist for the U.S. currency manipulator tag
© Reuters.

(Reuters) – Treasury Secretary Janet Yellen’s second foreign exchange report, yet to be released, risks labeling some U.S. trading partners as currency manipulators, although the department held off from applying that label in its last report.

The foreign exchange manipulator designation is based on three broad criteria: a $20 billion-plus trade surplus with the United States, a current account surplus exceeding 2% of GDP, and currency intervention exceeding 2% of gross domestic product.

The Treasury in April stopped short of formally branding Vietnam, Switzerland and Taiwan as currency manipulators even though they tripped some of its thresholds under a 2015 U.S. trade law. The Trump administration had labeled Switzerland and Vietnam as currency manipulators in December 2020.

In its April report, the Treasury said it found 11 economies warranted placement on its “Monitoring List” of major trading partners.

There is no automatic punishment resulting from a currency manipulator label, though U.S. law requires Washington to demand negotiations with designated trading partners.

For the next report, originally due on Oct. 15, analysts said the following trading partners are at risk – but doubt they will get the label. 

Graphic: FX valuations, https://fingfx.thomsonreuters.com/gfx/mkt/byprjkagape/FX%20valuations.JPG SWITZERLAND

* Switzerland was labeled a currency manipulator by the Trump administration in December 2020, but was spared being formally branded in Yellen’s first report in April.

* Switzerland is likely to meet all three criteria, although analysts doubt it will be given the designation.

    * Switzerland’s bilateral goods trade surplus of $39 billion in the 12 months to June 2021 exceeds the Treasury’s threshold, and it has a current account surplus equivalent to 3% of GDP in the 12 months to the end of the second quarter.

* Although the Swiss National Bank has scaled back its interventions recently, it spent 25.4 billion francs in the 12 months to June 2021 – equivalent to 3.5% of Swiss economic output and more than the 2% limit set by the Treasury.

    * Still, analysts believe Switzerland won’t be on the list because the Treasury Department (TD) can also look at other factors like currency development, monetary policy and trade policy action.

TAIWAN

* Taiwan was last formally labeled a currency manipulator by the United States in December 1992. It was put back on the monitoring list in 2020.

* Taiwan breached all three of the criteria, according to analysts at TD, although they do not expect Taiwan to be labeled a currency manipulator.

* Taiwan’s trade surplus with the United States hit $29.9 billion in 2020, according to official data, almost $7 billion more than in 2019, while the current account surplus last year was around 11% of GDP, exceeding Washington’s criterion.

* In the first nine months of this year Taiwan’s trade surplus with the United States hit $17.94 billion, up $5.13 billion on the year-ago period. The current account surplus in the first half of this year reached around 14.6% of GDP.

* The central bank said in September that in the first half of this year it bought a net $8.73 billion to intervene and “avoid serious disorder” in the currency market.By comparison, the central bank purchased a net $39.1 billion for all of 2020. Analysts at TD said Taiwan’s purchases amounted to 7.8% of GDP.

* The Taiwan dollar’s 5.6% gain against the greenback last year was among the strongest in Asia. It is up about 2.5% against the greenback this year and among the best-performing Asian currencies.

* Taiwan’s case is complicated by geopolitical pressures, including heightened military tensions with China, and the island’s position as a major exporter of semiconductors that are needed to help ease a supply shortage for U.S. manufacturers.

* The U.S. is likely to take into account both Taiwan’s special economic situation vis-à-vis its booming tech exports and key role in making chips, as well as the need to show U.S. support for Taiwan in the face of Chinese pressure when it comes to making a decision on whether to label it a manipulator.

VIETNAM:

* Vietnam was labeled a currency manipulator by the Trump administration in December 2020 but was spared being formally branded in Yellen’s report in April.

* Vietnam met the criteria for its trade surplus with the United States of $83.8 billion and its foreign exchange intervention, 4.1% of GDP, but not on its current account, according to analysts at TD.

* After having reached an agreement with the U.S. Treasury to refrain from “competitive devaluation” and make its monetary and exchange rate policies more transparent in July, the State Bank of Vietnam (SBV) stopped buying U.S. dollars in the forward markets after seven months of doing so, and reverted to purchasing spot dollars.

CHINA

* The Treasury Department under the Trump administration designated China a currency manipulator on Aug. 5, 2019, but in January 2020 Treasury dropped the designation days before the signing of a preliminary agreement to end the China-U.S. trade war.

* Trade remains a contentious bilateral issue despite a recent bilateral summit between President Joe Biden and Chinese leader Xi Jinping.

Forex

Dollar Becalmed After Falling in Response to Omicron Hopes

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Dollar Becalmed After Falling in Response to Omicron Hopes
© Reuters.

By Geoffrey Smith 

Investing.com — The dollar was flat in early trading in Europe on Friday, on course to end the week lower after encouraging signs from the pandemic revived global risk appetite, supporting higher yielders. 

By 3:30 AM ET (0830 GMT) the , which tracks the greenback against a basket of half a dozen advanced economy countries, was effectively unchanged at 96.06. Moves in all the major currencies were also minor. The euro was up less than 0.1% at $1.1347 and the pound was up a similar amount at $1.3412.

However, the dollar has lost between 1% and 1.5% this week against and the , and dollars, and nearly 1% against the , as scientific data has dribbled out suggesting that the latest wave of the pandemic will be less economically damaging than previous ones. The only notable gains it has made have been against other haven currencies, such as the and the . 

Data released on Thursday that showed sustained inflationary pressure in the U.S. weren’t enough to upset the broader optimism as a growing body of evidence suggested that the Omicron variant of Covid-19 is less likely than all previous dominant strains to lead to serious illness. The more evidence goes in that direction, the less likely disruptions to economic life will become. 

Trading has now all but stopped ahead of the Christmas holiday period, but markets remain at least formally open.

As has been the case all week, the sharpest moves are in the , whose rally in response to President Recep Tayyip Erdogan’s attempts to stop dollar hoarding now appears to be running out of steam. From a high of over 18 lira last week, the dollar fell as low as 10.1565 on Thursday before starting to gain ground again. By 3:30 AM ET, it traded at 11.6279, up 3.6% on the day.

The was testing its highest level in over a month after news suggesting that talks with the U.S. to de-escalate the situation on the Ukrainian border may take place in the near future. President Vladimir Putin slightly dialed down the tension at his annual press conference on Thursday, declining to repeat a threat of military action that he had made in a speech earlier in the week.

The also strengthened after fresh data showing that the first country to identify the Omicron variant of Covid-19 may soon put its latest infection wave behind it. The 7-day average for new infections is already down by around a quarter from its peak last week. 

 

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex

Dollar Down as Fading Omicron Fears Boost Investor Risk Appetite

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Dollar Down as Fading Omicron Fears Boost Investor Risk Appetite
© Reuters.

By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia, with investors towards riskier assets as fears of the omicron COVID-19 variant’s virulence continue to fade.

The that tracks the greenback against a basket of other currencies inched down 0.02% to 96.035 by 10:52 PM ET (3:52 AM GMT).

The pair inched down 0.03% to 114.35, with Japan’s cabinet approving a for the year starting in April 2022. According to the country’s Finance Ministry, Japan plans JPY107.6 trillion yen ($941.26 billion) in overall spending for the year ending March 2023, a 0.9% increase from the current year’s initial budget.

Meanwhile, data released earlier in the day showed that Japan’s grew 0.5% year-on-year in November.

The pair edged down 0.13% to 0.7232 and the pair edged down 0.14% to 0.6815.

The pair inched up 0.01% to 6.3702, with the People’s Bank of China setting a weaker-than-forecast yuan fixing, at 6.3692 per dollar, for a record 15th day on Friday. This is the longest period of lower-than-expected yuan fixings since surveys began in 2018, based on instances when the rate is even a fraction below the estimate.

The pair inched up 0.03% to 1.3409.

Volumes were thin ahead of the holidays, with U.S. markets closed and other markets, such as Hong Kong, ending the trading day early.

Investors cheered the U.S. Food and Drug Administration’s emergency use approval for Molnupiravir, Merck & Co . Inc.’s (NYSE:) COVID-19 pill, on Thursday.

A U.K. study that said omicron infections are less likely to lead to hospitalization also boosted sentiment. However, the study added that the variant may still produce a substantial number of serious cases due to its infectiousness.

Meanwhile, a laboratory study showed that two doses and a booster of Sinovac Biotech Ltd.’s vaccine did not produce sufficient levels of neutralizing antibodies to protect against omicron.

Elsewhere in Asia Pacific, authorities locked down the western Chinese city of Xi’an, the biggest such move since the pandemic started in early 2020. The city’s 13 million residents were told to remain in their homes and to designate one person to go out every other day for necessities, in a bid to curb China’s latest COVID-19 outbreak.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex

Singapore central bank $60 billion swap facility with Fed to expire on Dec. 31

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Singapore central bank $60 billion swap facility with Fed to expire on Dec. 31
© Reuters. FILE PHOTO: A view of the Monetary Authority of Singapore’s headquarters in Singapore June 28, 2017. Picture taken June 28, 2017. REUTERS/Darren Whiteside/File Photo

SINGAPORE (Reuters) – Singapore central bank said on Friday its $60 billion swap arrangement with the U.S. Federal Reserve will expire on Dec. 31, as U.S. dollar funding conditions in Singapore and the region have normalised and continue to be stable.

The facility launched in March 2020 provided $24.6 billion to local, regional and international banks in the midst of the COVID-19 crisis, the Monetary Authority of Singapore (MAS) said.

“MAS continues to remain vigilant to USD funding conditions in Singapore and will be prepared to take action in the event of severe strains in the USD funding market,” it said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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