Archive for May, 2007

Yen pulls away from three-month low, edges up on Japan CPI figures

Friday, May 25th, 2007

In Tokyo today, the yen edged up from a three-month low versus the dollar. This happened after the figures showing Japan’s core consumer prices cut down at a slower rate in the month of April, keeping the Bank of Japan on target to move up the rates in the near-term.

A trader at a Japanese bank was of the view that the figures showing Japan’s core consumer prices were not all that unexpected and therefore buying the yen was a late reaction to the drop in U.S. stocks, due to some risk fears. 

Traders are planning to keep a watch on any yen strength in the sessions. 

On the other hand, Forex market players have extensively borrowed the lower yen currency to finance purchases of higher priced currencies and equities in the carry trade. This action has aided raise sterling to a 15-year high versus the yen.

As the dollar came down from near 121.41 yen to a 121.21 yen in the late New York trade, it should be remembered that the U.S. currency had risen to a three-month high of 121.88 yen earlier this week too.

The euro had also dipped from near 163.01 yen to 162.71 yen on Thursday.

With Japan’s balanced growth and development which can be viewed in a quiet good shape now, hopes have build up for the Bank of Japan to boost rates from the current 0.5 percent to a 12-year high of 0.75 percent in August or September, after the parliamentary elections in the month of July.

Yen boosted, while Dollar sustained by sound US data

Friday, May 25th, 2007

In London today, the US dollar marked a six-week rise against the euro, as was applauded by the sound U.S. housing data in the previous session. The falling stock market on the other hand, boosted the yen.

The latest update on Thursday about the upbeat housing data was that the U.S. new home sales had raised rapidly this April compared to the last 14 years due to the builders cutting the prices.

Since much of the Europe and United States were to remain shut on Monday due to public holidays, the trading was likely to be subjugated by the news or data as well as the position squaring.

Investors in Forex markets are taking a somewhat extra cautious approach to risk, as the recent meetings in stocks seeming to recede. They are trying to balance some of their carry trade bets.

FX strategist at Nordea in Copenhagen, Niels Christensen said that the dollar has become firm today after the housing data yesterday, although there is a hint of uncertainty on stock markets. 

At 162.21 yen per euro, the Japanese yen hit a two-week rise before cutting back the gains to settle at 163.01.

A Learning from China for managing Forex

Friday, May 25th, 2007

The Finance minister of India expressed the need for his country to learn the technique of managing finances correctly from the experience of China.

Finance minister of India, P. Chidambaram was present along with Bharti Enterprises chairman Sunil Mittal and CII president R. Seshasayee, to attend an annual general meeting of the CII in New Delhi, India, on May 24, 2007.

Alongside, Mr. Chidambaram also said that they required for better management of foreign funds in India, for counterbalancing their influence on the overall prices as well as the exchange rate.

The sudden fluctuation in the market hurts investment, and therefore, the overall trade and economy of any country whose market is moving unstably.
In India, with the massive inflow of US dollars, there has been a rise in the rupee, which is hurting a few exporters as well as affecting the overall market. This movement in the market has been playing a crucial role in inflation.

In the CII annual meeting, the Finance minister also stated that India must learn to control as well as manage these overflows. Although, he also said clearly that not too stringent measures should be taken which may lead to a restricted investment.

Discussing Forex, talks were held regarding the depreciation of rupee to a 40.60 against the dollar, although it had been on an upward trend since a few weeks now.

The major hand in the upward trend for the price of the Indian Rupee was that of the overseas borrowings by some companies, direct foreign investments and stock purchases by worldwide funds. All these factors have together powered the rupee upwards by almost 14 per cent in a period of about 10 months.

The reason for the overflow of US dollar in the Indian markets is also being said to be the absence of Reserve Bank of India from the Forex markets, which is said to have added to the flow.
Whenever the Indian Rupee fluctuates, the RBI often plays the role of an intervener to keep a check on its rise or fall, trying to balance it and guard the interests of the exporters.

The figures revealed in the meeting stated that the US dollar purchases done by the Central Bank of India had declined to a figure of $2.3 billion in the month of March as compared to the purchase figure of $11.9 billion in the month of February.

The measures which were being planned to be taken up to control the US dollar overflow included the restrictions which would be placed by the Indian government on the external commercial borrowings (ECBs) by the real estate and property companies. 

Forex Trading – Risky business for Beginners

Tuesday, May 22nd, 2007

If the beginners do not have the relevant information and knowledge about Forex market and trading, they are likely to lose all their money in it. This information was shared with all by Andy Poon, a spokesperson for the British Columbia stocks regulator, on Friday, in Vancouver, Canada.
He also stated that the Foreign exchange trading was not for new and untrained traders. 

Foreign exchange or Forex trading is where trading of foreign currencies takes place. Somewhat like a stock market where a trader trades one stock for another, here an investor trades one country’s currency for another

In the Forex market, the currencies are exchanged to make profit from the differences in the exchange rate between the two currencies too, almost like the stock market.

But Forex trading is a further complex trading of currencies, than that of trading equity. Internet, with its mushrooming online software platforms for trading are luring away aspiring traders to trade from home, making it even simpler for them to jump into it.
This has also opened up the world of foreign exchange trading to an extensive range of Forex aspirants.

Just because the investors feel that they know how to use internet, does not make them eligible for Forex. Trading Forex sitting at home is as complex as every other medium. Internet does not make it any simpler and safer. Trading foreign currencies is a complex procedure which involves a lot of expertise and knowledge.

The B.C. Securities Commission has warned every aspirant trader that trading Forex without appropriate skill and knowledge can be very risky.  

Andy Poon, a spokesperson for the British Columbia stocks regulator, is also of the opinion that online seminars and trainings for Forex trading are not sufficient for the amateurs to get full knowledge about Forex.
He also said that these online programs and seminars cannot substitute for the research, study and professional skills needed by a trader to battle the currency markets.

Andy Poon also stated that Forex is sometimes all about investing and trading on margin and in such cases, people tend to borrow money from others to make their investments. This kind of a measure by trading on margins can at times earn them extravagant profits, but it also has equal potential to get those traders extreme losses.

George Davis, chief FX technical analyst at RBC Capital Markets, is of the opinion that tracking the things that can have an affect on the value of a currency is a far more difficult process than tracing the factors responsible for affecting the stocks.

He said that for currency exchange, a trader needs to start with knowing all about what is going on with a particular country’s politics, as well as take into consideration its economy, government or central bank policy, and other geopolitical concerns.

Beijing releases its foremost Forex venture

Tuesday, May 22nd, 2007

On Monday, with a pioneering investment agreement in hand, China’s upcoming Forex Investment Company declared that it is going to purchase a US$3 billion share in the US huge takeover firm, Blackstone, as its primary venture.

The deal was done on Monday, just before the Sino-US trade talks. These talks are to be presided over by Wu Yi, Vice Premier and Henry Paulson, US Treasury Secretary.

Antony Leung Kam-chung, the present chairman of Blackstone Greater China and former financial secretary, has surfaced as a dealmaker surreptitiously.
According to The Wall Street Journal, the first dialogue took place in the month of April when Antony Leung, placed in Hong Kong, went to Beijing to have talks with Lou Jiwei, chief of the state investment company’s working group, and two of his leading deputies, including the chairman of Jianyin Investment, Jesse Wang Jianxi.

Market observers stated that this deal projected that the mainland administration is all set to affect a more forceful investment policy when the State Investment Company starts acting as a worldwide financier, setting out a fraction of China’s US$1.2 trillion worth foreign exchange reserves on the world arena.

A few weeks after the campaign for the State Investment Company was publicized and Blackstone decided to enter and get listed with the stock market as the first completely buyout firm, that Leung approached Lou Jiwei, chief of the state investment company’s working group to ask if China was keen in investing in the Blackstone funds. 

And after about two to three weeks, Leung received the answer that the Chinese were certainly keen but not in investing in Blackstone funds, but in getting a share in Blackstone itself. The deal was closed on Sunday.

The Blackstone Group has now laid down its opening public offering which is likely to range between US$29 to US$31 per unit. As about 133.3 million common units are being obtainable, the total resources which can be raised through them all are being expected to be an estimated price of US$4.75 billion.

This can be said in accordance with a document which was filed on Monday, with the Commission of Securities and Exchange.

A strategist at a US house was of the opinion that the investment signifies that the mainland administration is now all set to invest in a more insistent way and in a more widespread manner than estimated. This notably shows that the key precedence for this investment is grand revenue.

According to Steve Schwarzman, co-founder of Blackstone, this is a big indication that the country is now all set to reprocess its assets and ease up the currency flows from China, which is a remarkably significant pattern shift.

US dollar stiffens in Sydney

Tuesday, May 22nd, 2007

In Sydney today, the US dollar went up against the Japanese Yen as well as Euro, while the investors eagerly wait for the opening of trading in Europe alongside the main German ZEW financial sentiment review for the trading month of May. 

Richard Grace, Commonwealth Bank chief currency strategist stated that the rise in the US dollar this present week is likely to show the way to a rise in the currency pair Dollar/Yen. This is especially due the episode when the Forex markets waved off credit reduction procedures which were announced by China preceding weekend.

Forex Markets are expected to have all its focus on the commencement of the two-day conference between the vice-premier of China, Wu Yi and Henry Paulson, US treasury secretary, regarding trade issues and the yuan. This conference is to be held in Washington.

At 0346 GMT here in Sydney, the US dollar was at 121.52 Japanese Yen. The dollar had a rise from its morning trade at 121.45. The Euro is the meanwhile while was at 1.3455 US dollar, which is a little down from its earlier figure of 1.3461.

The investors are of the view that a modest reaction is what should be expected from exchange markets after the proceedings of the April meeting of Bank of Japan are made public at Tokyo at 0500 GMT, today.

These proceedings are likely to signify that the BoJ will keep the rates of interest on hold over for some of the approaching months. This kind of an event is already being broadly anticipated in the market.

Richard Grace was also of the opinion that the interest rate hike as well as the widening of the yuan trading band in China will work slightly to stimulate a main deceleration in the Chinese market and financial system.
This is because of the fact that the carry trades still remain high up as risk-taking desires of the traders has not yet been dented.

Rise in regional U.S. business helps Dollar match 3-mth high vs. yen

Friday, May 18th, 2007

Just before the meeting of the Group of Eight finance ministers in Potsdam, Germany, which is scheduled to start later today, the low-cost Japanese Yen continued to get weaker close to a record low against the Euro.

In Tokyo today, the U.S dollar rose again to match up the preceding session’s three-month high against the Japanese yen. According to the data, the reason behind this high is said to be the strong growth in regional U.S. business activities, with the viewpoint that the U.S. rate of interests will stay in a state of uncertainty for a while.

An investor for one of the biggest Japanese Banks said that the atmosphere in the currency market appears to be that for trying to achieve new highs in the U.S dollar. 

Also stated by the investor was the speculation that the by the end of May this year, the U.S dollar may rise above and beyond a four-year high of 122.21 Japanese Yen that it hit in the month of January, to a higher position of about 122.51 yen 

At about 0210 GMT, the U.S dollar stood at 121.31 Japanese yen, after mounting as high as 121.36 Japanese yen on internet, or the electronic trading platform, easily matching a hit which the dollar moved yesterday, a hit which was the peak since the late February this year.

Seeing this movement in the currency market, most traders were of the opinion that this U.S dollar rise could be raged by profit-taking. They also said that the Japanese exporters may also settle on selling the U.S dollar now in order to take full advantage of this rise.

The euro was stable at $1.3491 but fixed near about a one-month low down of $1.3461 hit which it faced late last week. Although in opposition to the Yen, the Euro moved a little at 163.64 yen, fixing near a high of 163.91 yen which was hit previously this week.

For the G8 meeting later today, a senior U.S. Treasury official had said earlier this week that no debate about currency rates was anticipated at the meeting.

While concern and watchfulness was being felt prior to the G8 meeting this weekend, investors were of the opinion that the gathering, it appeared, was doubtful to generate much news which could shock the exchange markets.

The main reason for their doubts was the absence of Henry Paulson, U.S. Treasury Secretary, who is said to be skipping the event.

RBI has very little involvement in Forex market

Friday, May 18th, 2007

“RBI has very little involvement in Forex market” said the deputy governor of Reserve Bank of India, Rakesh Mohan.  He also confirmed that the Reserve bank had only a small amount of involvement in the Forex market, which resulted the Rupee to secure at a nine-year high of 40.79 per dollar 2 days back. 

As confirmed by report, he also said that the revenue in the Forex market heaved to 6.5 trillion USD in the trading years 2006-07 as compared to the 1.3 trillion USD in the trading years 1997-98.  

He was also of the opinion that though the Reserve Bank of India intervenes in the Forex market in a key way, if the volume of involvement is taken into consideration, it is really small in comparison to the proceeds in the Forex market on the whole.
As of now, the trading market feels that the central bank wants to let the Rupee rise against the Dollar in order to check a strengthening price rise. On the other hand, a lower price rise figure exposed newly generated fears that the Reserve Bank of India could now step in the Foreign exchange market to shield home exports.

Mr. Rakesh Mohan also disclosed that the growth of asset flows during the last six months have made it even more complicated for the Reserve Bank of India to control the state of affairs in the currency market.

He also stated that over a long stretch of period, with the fiscal sector developments, the nation’s currency market has expanded and a great deal of price breakthrough is happening.

He also said that despite the fact that inflows increase the liquid cash flow into the system, there were stretches of tension accompanied by the improved tax collections, which have amplified the challenge of liquidity supervision for the central bank.  



In 2006, Currency trading volume boosted 17 Percent

Wednesday, May 16th, 2007

A report released by Greenwich Associates on May 15, 2007 stated that the Currency trading volumes heaved about 17 percent between the trading years 2005 and 2006.

This report by the Greenwich based Forex consultancy also stated that the exchange trading volumes grew to $70.6 trillion with more than 1600 big financial firms and organizations participating in its annual survey which was held in the year 2006.

Peter D’Amario, a Greenwich Associates consultant said in his statement that in the Forex market, two trends were particularly responsible for boosting trading activity to a fresh and prospectively maintainable level, and these two trends are:

  • The amplified global investment actions related to globalization
  • The growing use of electronic trade and business systems.

The highly awaited Greenwich report covers just the exchange trading done by the clients in the Forex market and does not talk about or include inter bank news and trading.

The Greenwich Associates firm has also been said to state that the financial organizations supplied the major part of the rise in Forex trading between the trading years 2005 and 2006. While this was the case with the financial institutions, the hedge fund trading volumes have been said to have grown more moderately.

It was also stated by Greenwich that the number of retail Forex customers like novice traders was also rising, although the corporate trading volumes were effectively normal comparatively.

The Greenwich report also added further that while in the trading year 2005, electronic trading was reported for just about 40 percent of the trading volumes, while presently, more than half of the Forex trading volumes are carried out electronically. 

Yen stabilizes as investors get wary

Friday, May 11th, 2007

On May 11, 2007, Tokyo Forex market saw Yen stabilizing after making large growth in the prior sessions. The reason for this is said to be the traders who have cut back on their short term positions.

It is believed that the traders took this action on admonitions that descend in Asian assets as a result of the exits from the U.S. stock markets might accelerate more risk-cutting.

In the situations when the investors witness acute move outs in the worldwide stock markets, there is a high chance that they might decide to cut their risks by not trading deals, in which low-profit currencies like the Japanese Yen are required to finance investment in high-profit currencies and stocks.

But it is believed that the traders will continue to watch the performance of European and U.S. equity markets further along the day to get an idea about the Japanese Yen’s approaching direction.

A few traders were also of the view that if the stock markets show flexibility again, they might recommence the trading by selling Yen again.

Other than that, as of 0525 GMT, the dollar was stable at 119.90 Yen.

Although the dollar had experienced a slight fell to a low as near as 119.72 Yen earlier in the market, it later cut back on the losses, to a certain extent due to the trade done by the Japanese investment trusts.  

Alongside, the Euro fell to a 161.59 Yen from roughly 161.71 in on late Thursday in the US trading.

Whereas the higher-profit exchanges like the New Zealand and Australian dollars recovered the shortfall against the Japanese Yen by rising about 0.4 to 99.41 yen, after the traders restrained their positions overnight, in carry trade.