© Reuters. South Korean 10,000 won note is seen on U.S. 100 dollar notes in this picture illustration taken in Seoul, South Korea, December 15, 2015. REUTERS/Kim Hong-Ji/File Photo
By Jihoon Lee
SEOUL (Reuters) -South Korea’s won fell below the psychological threshold of 1,300 per U.S. dollar for the first time in 13 years, amid global economic recession worries and the dollar’s strength, but traders said market sentiment was relatively calm.
The won weakened as much as 0.42% in onshore spot trade on Thursday to touch the lowest since July 14, 2009, at 1,302.8 per dollar.
The 1,300-mark, a level seen during the 2008-2009 global financial crisis and 1997-1998 Asian financial crisis, has been considered for years as a sign of major economic risks.
However, domestic foreign exchange dealers said it was different this time, as changing supply-demand landscapes in recent years, such as increasing overseas investment, should also be a factor influencing the price in addition to the dollar’s strength at two-decade highs.
The won has weakened more than 8% this year, following an 8.6% drop in 2021 that was the fastest annual fall since 2008.
Last year, South Korea’s National Pension Service increased its holdings of overseas stocks and bonds by 82.9 trillion won ($63.85 billion), or 35%, in line with its long-term plan to boost overseas investment for the fund’s profitability and sustainability.
Retail investors also purchased a net $21.9 billion worth of overseas stocks in 2021, after $19.7 billion in 2020 on increased interest in stock investment. They have bought a net $12.4 billion so far this year.
Meanwhile, in the country’s local stock market, foreigners have sold a net 15.9 trillion won ($12.25 billion) worth of shares so far this year, following a total 50 trillion won ($38.51 billion) sell-off in the previous two years.
South Korea has posted an accumulative $7.83 billion trade deficit from January until May this year, and if the trend continues, Asia’s fourth largest economy will log the first annual deficit since 2008.
“The market atmosphere is very calm and definitely different from the past,” an FX dealer said. “It is just another number now, and there is no signal felt of any risk at all.”
($1 = 1,298.3400 won)
Lira Weakens as Corporates Keep Buying Dollars Despite New Rule
© Bloomberg. An electronic board displays exchange rates information at a currency exchange bureau in Istanbul, Turkey, on Friday, June 24, 2022. Tourism arrivals in May surged 308% year-on-year, boosting hopes that a rebound in the sector can support the weakening Lira. Photographer: Erhan Demirtas/Bloomberg
(Bloomberg) — Sign up for our Middle East newsletter and follow us @middleeast for news on the region.
The Turkish currency retreated on Tuesday as companies continued to buy dollars for a second day after a new rule imposed restrictions on extending lira loans to foreign-exchange-rich corporates.
The lira fell as much as 0.5% to 16.6376 per dollar after rising more than 2% on Monday. Corporates purchased dollars even as state lenders moved to defend the local currency, according to three traders who asked not to be identified because they’re not authorized to speak publicly.
State lenders sold more than $1 billion in two days to support the currency, they said. One trader said the net impact was limited as some firms’ dollar sales were offset by others.
The country’s banking regulator restricted commercial lira loans to corporate borrowers if they held more than 15 million liras ($902,000) in foreign currencies and if such an amount exceeded 10% of total assets or annual sales. The move is one of the most forceful attempts to date to support the lira.
Instead of raising interest rates to contain soaring inflation and the voracious local appetite for dollars, regulators have put in place a series of other curbs to support the currency since 2018. The central bank has held its key policy rate at 14% over the past six months while consumer prices rose at the fastest pace since 1998. Turkey’s interest rates are now the world’s most negative when inflation is factored in.
The regulator’s chief, Mehmet Ali Akben, said the measure will “ensure loans are properly used” and will “positively contribute to bringing inflation under control,” state-run Anadolu Agency reported.
The Borsa Istanbul 100 Index, Turkey’s equity benchmark, climbed 0.6% as of 1 p.m. in Istanbul. The cost of insuring the nation’s bonds against default for five years rose 13 basis points to 784.
State banks don’t comment on their interventions in the foreign-exchange market. A former central-bank governor said in 2020 that government-owned lenders carry out transactions in line with regulatory limits and may continue to be active in the currency market.
©2022 Bloomberg L.P.
Dollar Up Despite Concerns Over Economic Recession
By Zhang Mengying
Investing.com – The dollar was up on Tuesday morning in Asia despite worries about economic recession. Investors await a speech from the European Central Bank (ECB) President Christine Lagarde.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.02% to 103.96 by 11:21 PM ET (3:21 AM GMT).
The USD/JPY pair edged down 0.13% to 135.26.
Governor of the People’s Bank of China Yi Gang said the central bank will keep its policy supportive for China’s economy.
Investors are keeping an eye on signs of weakness in recent economic data, which would possibly moderate interest rate hikes. But they are also concerned that it could be a sign of the onset of a difficult period of stagflation.
“Stay long the dollar until some of the uncertainty has reduced,” Societe Generale) strategist Kit Juckes told Reuters.
“The dollar will fall likely only when the global economy is on a more sustainable growth path … markets are forward-looking, but all we can see ahead today is danger.”
Across the Atlantic, German inflation figures are due on Wednesday, and French data is due on Thursday.
“This set of inflation data will have a significant influence on the ECB‘s monetary policy forward guidance, especially on the trajectory … of its interest rate hike cycle that is expected to kick start in July,” CMC analyst Kelvin Wong told Reuters.
The ECB President Christine Lagarde, U.S. Federal Reserve Chair Jerome Powell, the Bank of England Governor Andrew Bailey, and Cleveland Fed President Loretta Mester are due to speak at the ECB forum in Sintra, Portugal this Wednesday.
The Group of Seven (G7) leaders are about to discuss the means to tackle rising energy prices. They are examining a new package of actions aimed at increasing pressure on Russia over its war in Ukraine.
The ‘Big Package’: How Russia was driven to default
© Reuters. FILE PHOTO: European Commission President Ursula von der Leyen arrives for the European Union leaders summit, as EU’s leaders attempt to agree on Russian oil sanctions in response to Russia’s invasion of Ukraine, in Brussels, Belgium May 30, 2022. REUTERS
By Marc Jones
LONDON (Reuters) – Russia’s first major international debt default in over a century, which Washington said became a fact on Monday, follows months of co-ordinated Western sanctions that left Moscow with cash but no access to the international financial network.
Below is a summary of the key moments that have led up to this point.
THE “BIG PACKAGE”
At around 11.30 p.m. (2230 GMT) on Feb. 25, the day after Russian troops entered Ukraine, European Union’s experts in Brussels said a set of sanctions they had worked on for days, or the “Big Package” as they called it, was ready.
Just before midnight, the European Commission announced https://www.consilium.europa.eu/en/press/press-releases/2022/02/25/russia-s-military-aggression-against-ukraine-eu-imposes-sanctions-against-president-putin-and-foreign-minister-lavrov-and-adopts-wide-ranging-individual-and-economic-sanctions the measures.
While emergency Group of Seven and EU meetings earlier made clear a response was coming, the package named Vladimir Putin and his top diplomat Sergei Lavrov personally, and, as it later became clear, froze some $300 billion of the Russian central bank’s reserves.
“That was really the moment when we said, okay, well we’ve done it,” one European source told Reuters. “That was, I think, a very pivotal moment for a lot of people around a table.”
Graphic: EU’s Von der Leyen lays out Russia sanctions- https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrmloapm/Pasted%20image%201656346091349.png
Days later, on March 2, the EU struck again by banning seven Russian banks from SWIFT, an international financial messaging system crucial for cross-border transactions.
Booting Russian lenders from SWIFT had long been considered a ‘nuclear option,’ but the invasion put it on the table and when the EU decided to activate it, those at SWIFT headquarters just outside Brussels were ready.
The only question was how long they had to implement the move, “five days or five minutes?” another source said. In the end is was 10-12 days.
FIRST CUTS, BUT NOT THE DEEPEST
Credit rating agency, S&P Global (NYSE:SPGI), already stripped Moscow of its coveted investment grade rating on Feb. 26 and Russian bonds were slumping, but a heavier blow followed on March 15, when the EU told top credit agencies to stop rating Russian dept or risk losing their licenses to operate in the bloc.
“We were caught flat-footed, certainly we were not given any advanced warning,” one senior rating agency analyst said. “Basically the question was, does this mean we can’t rate Russia any more?” It turned out the answer was yes.
Graphic: Driven to default Driven to default- https://graphics.reuters.com/UKRAINE-CRISIS/RUSSIA-BONDS/mopanryzgva/chart.png
DEFAULT DEADLINE ONE
With so many hurdles being erected, expectations built that Russia would default on its first post-sanctions’ bond payments either on March 16, or a month later at the end of a 30-day “grace period.”
However, a special “waiver” in the U.S. sanctions granted by the Treasury’s Office of Foreign Assets Control allowed payments to go through.
On April 8, a week before the EU ban on Russian ratings was due to come into force, S&P declared Russia in “selective default” after Moscow said it planned to make upcoming bond payments in roubles rather than dollars, their issue currency.
On May 3 though, shortly before the payment was due, the Kremlin U-turned and paid in dollars.
SHOCK TO THE SYSTEM
Days later, Russia had stumbled, though.
On May 11, sharp-eyed creditors spotted that Moscow had failed to add $1.9 million of extra interest that had built up on bonds that only got paid in their grace periods rather than on time. They contacted the clearing house Euroclear and then bond market equivalent of an insurance payment arbiter – the Credit Derivative Determinations Committee https://www.cdsdeterminationscommittees.org/cds/the-russian-federation which ruled that a “credit event” had happened.
The sum was too small to trigger default clauses in all of Russia’s international bonds, but it did mean some investors expected to receive default insurance payments.
But when the U.S. Treasury clarified on its website that buying Russian bonds on the open, or ‘secondary’ market, was banned, that credit default swap (CDS) insurance process had to be halted as it was no longer clear what to do with the bonds involved.
“It is a bit like if your house burns down and the insurance company turns around and claims it was the wrong kind of fire,” said Joe Delvaux, emerging markets distressed debt portfolio manager at Europe’s largest fund manager Amundi. “The reality is that these sanctions are a shock to the system.”
The step that made Russia’s default unavoidable though was Washington’s May 24 decision to let the waiver that had allowed U.S. bondholders to receive Russia’s payments, expire.
A week later, the EU also sanctioned Russia’s domestic paying agent, its National Settlement Depository (NSD), which it had been using to make the payments.
Moscow has blamed the West for forcing an “artificial default”., with its finance minister Anton Siluanov calling the situation a “farce.”
However, veteran global policymakers involved in the process say they sanctions are unprecedented but fully justified.
“They were very significant actions that responded to the magnitude of the actions that Russia undertook,” Agustin Carstens, the head of the world’s central bank umbrella body, the Bank for International Settlements, said.
Graphic: Biden stresses power of U.S. sanctions- https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkloyovx/Pasted%20image%201656321187075.png
(This story refiles to fixe typo in 1st paragraph).
Dogecoin price could rally 20% in July with this bullish reversal pattern
Dogecoin price could rally 20% in July with this bullish reversal pattern Dogecoin (DOGE) looks ready to extend its rebound...
Easing chip shortages to help Volkswagen in H2 – CEO
© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York...
Futures rise as easing China COVID curbs lift travel, leisure stocks
© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S.,...
Euro below $1.06 as Lagarde keeps July policy options open
© Reuters. A shopper pays with a ten Euro bank note at a local market in Nice, France, June 7,...
China’s economy recovering but foundation not solid, premier says
© Reuters. FILE PHOTO: Chinese Premier Li Keqiang is seen on a screen as he attends a news conference via...
3 charts showing this Bitcoin price drop is unlike summer 2021
3 charts showing this Bitcoin price drop is unlike summer 2021 Bitcoin (BTC) bear markets come in many shapes and...
Reliance Chairman Mukesh Ambani steps down as director of telecom arm
© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general...
UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks
© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks By Senad Karaahmetovic UBS analyst Kunal Madhukar...
Bank of America Clients are Selling This Rally
© Reuters. Bank of America Clients are Selling This Rally By Senad Karaahmetovic Bank of America strategist Jill Carey Hall...
Michelin to hand over Russian operations to local management
© Reuters. FILE PHOTO: The logo of French tyre maker Michelin is seen on tyre of a Formula E racing...
U.S. Capitol riot panel promises new evidence at surprise Tuesday hearing
2/2 © Reuters. FILE PHOTO: A video of former U.S President Donald Trump speaking is shown on a screen during...
Stocks, oil higher as China relaxes quarantine rules
2/2 © Reuters. FILE PHOTO: A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an...
FTM Begins to Retest Previous Highs As Correction May Be Over
FTM Begins to Retest Previous Highs As Correction May Be Over Fantom (FTM) seems to be retesting previous highs. FTM...
White House says companies investing $700 million to boost EV charger production
2/2 © Reuters. FILE PHOTO: A electric vehicle charger is seen as a vehicle charges in Manhattan, New York, U.S.,...
SEC Chief Gary Gensler Labels Bitcoin a Commodity, but Other Cryptos Securities
The U.S. regulator has determined: bitcoin is a commodity. Other cryptocurrencies can be securities SEC Chair Gary Gensler reiterated that...
Explainer-Why the survival of Scandinavian airline SAS hinges on Denmark
© Reuters. FILE PHOTO: A Scandinavian Airlines (SAS) plane is refuelled at Oslo Gardermoen airport, Norway, November 7, 2019. REUTERS/Lefteris...
Lira Weakens as Corporates Keep Buying Dollars Despite New Rule
© Bloomberg. An electronic board displays exchange rates information at a currency exchange bureau in Istanbul, Turkey, on Friday, June...
Russia fines foreign firms for alleged data storage violations
© Reuters. FILE PHOTO: Attendees walk past a Twitch logo painted on stairs during opening day of E3, the annual...
Siemens to invest in Volkswagen’s N.American charging network
© Reuters. A electric vehicle charger is seen as a vehicle charges in Manhattan, New York, U.S., December 7, 2021....
Why Russian oil and gas price cap is easier said than done
© Reuters. FILE PHOTO: Model of petrol pump is seen in front of EU and Russian flag colors in this...
FTX-Robinhood Rumors: Piper Sandler Sees ‘Win-win’ Situation, Others Less Optimistic
© Reuters FTX-Robinhood Rumors: Piper Sandler Sees a ‘Win-win’ Situation, Others Less Optimistic By Senad Karaahmetovic Robinhood (NASDAQ:HOOD) shares...
Lufthansa CEO apologises for summer travel chaos
© Reuters. FILE PHOTO: CEO of German air carrier Lufthansa Carsten Spohr delivers a speech at the ILA Berlin Air...
G7 agrees to explore cap on Russian oil price – communique
2/2 © Reuters. FILE PHOTO: Yang Mei Hu oil products tanker owned by COSCO Shipping gets moored at the crude...
Uzbekistan warms up to Bitcoin mining, but there’s a catch
Uzbekistan releases requirements for miners Uzbekistan’s National Advanced Projects Agency (NAPP) has required miners to register and use solar power...
Ethereum’s Price Action Suggests Better Upside Potential
Ethereum’s Price Action Suggests Better Upside Potential At the moment, ETH’s price is closer to a bottom than a new...
From Peru to Uganda, activists call on Deutsche Bank to drop fossil finance
4/4 © Reuters. Ankuash Mitiap Kapuchak and Shapiom Noningo Sesen, indigenous leaders from Peru and Ricardo Perez of the environmental...
Factbox-Four key races in Illinois, Colorado midterm primaries
© Reuters. FILE PHOTO: An American flag flies outside of the U.S. Capitol dome in Washington, U.S., January 15, 2020....
Rescuers dig for survivors after Russian missiles demolish Ukrainian shopping mall
6/6 © Reuters. Rescuers work at a site of a shopping mall hit by a Russian missile strike, as Russia’s...
Renault teams up with Atos on data gathering
© Reuters. FILE PHOTO: The Renault logo on the Renault Scenic Vision concept-car is seen at its exhibition space, at...
Cardano Has Highest Development Activities in 30 Days: Report
Cardano Has Highest Development Activities in 30 Days: Report Sanbase reports a list of the top 10 coins with the...
- Coronavirus7 months ago
Biden administration still seeking agreement from Mexico on return of asylum seekers
- Cryptocurrency8 months ago
NFT World Records: CryptoDragons Sold Out 500 Eggs in Its Primary Pre-Sale in Тhe Тwinkling of аn Еye!
- Cryptocurrency8 months ago
Crypto.com is the #1 app in the Google Play Store in the US
- Economy7 months ago
Analysis-Europe’s big payday remains elusive even as inflation surges
- Cryptocurrency8 months ago
The Next Web 3.0 Social Media Will Be Built on Solana
- Cryptocurrency7 months ago
Binance.US aims for ‘mega funding,’ reveals CZ
- Cryptocurrency7 months ago
The Most Expensive NFT in The Sandbox Metaverse Sold for $650,000
- Forex7 months ago
Dollar Consolidates After Strong Gains; Tapering Could Be Speeded Up