Currency - General News

[winston]

Investors slash Singapore dollar bets, halve Asia FX holdings

Investors slashed bets on the Singapore dollar by more than 80 percent while cutting positions in most emerging Asian currencies during the last two weeks, a Reuters poll indicated on Thursday.

Investors more than halved bets on the Indian rupee, the Taiwan dollar, the Malaysian ringgit, the Philippine peso and the Indonesian rupiah, according to the survey of 11 currency analysts, conducted on Wednesday and Thursday.

They also reduced positions in the South Korean won to almost a half.

In the previous poll, published on February 2, investors were more bullish on emerging Asian currencies, adding bets on the rupee and the won to their largest in more than 15 months.

But the new poll showed that currency players reduced positions in the regional units as they were seen excessively bought and concerns over the euro zone's debt crisis grew again.

http://www.brecorder.com/money-a-banking/198/1156930/

[winston]

Three Currencies Ready for a HUGE Revaluation By Karim Rahemtulla

Both the U.S. dollar and euro are doomed.

Why? Because in addition to being in slow-growth economies, saddled with debilitating debts, they’re the victims of an enormous increase in money supply.

The obvious result is serious inflation and the devaluation of both currencies in the coming years.

Even if the United States doesn’t add to its already bloated debt, the interest on it – coupled with massive money printing – virtually guarantees higher prices.

Same goes for Europe, as the region is printing money out of thin air to bail out its ailing countries and banks.

However, the euro and dollar’s pain could easily be your gain.

You see, the situation is rapidly creating a new currency world order. Specifically, three currencies are poised for a massive upward revaluation…

http://yolotraderalerts.com/?p=3178&utm ... tion%20%20

[winston]

Are Fiat Currencies Headed for a Collapse? By: Lisa Oake

As the investment world eagerly awaits more stimulus, a debate on a previously unthinkable topic has started to emerge – can fiat currencies survive round after round of debasement?

Some heavy hitters say the answer is no.

A fiat currency derives its worth from the issuing government – it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

With major central banks all desperate to stimulate their economies, some say currencies have entered a dangerous new phase often described as a race to the bottom.

http://www.theburningplatform.com/?p=37942

[winston]

Big Hedge Fund Whacked – And Warm Feelings

One of the biggest leveraged hedge funds in the world got hit with a 2×4 during the 4th Q. This fund has a mixed bag of assets, but was heavily exposed to big FX positions.

The fund made a big “bet” recently when they went short EURYEN. This turned sour in a very big way; the EURYEN moved an incredible 14 big figures against them in just 60 trading days.

Street players, who know of this currency spec, refer to it as a “Size” position. At the end of Q3, it came to a lumpy short $40B. There were rumors that the fund added to the short during the Q (not confirmed yet). But even if the book was kept static, the mark-to-market loss comes to $5+B. That’s serious money to anyone.

Note: The short EURYEN book is looking terrible for this fund. The new Japanese Prime Minister is forcing a devaluation of the currency. The Japanese Central Bank is doing its best to achieve that devaluation. It’s possible that the fund will have to cover the short. If so, it could turn that “paper” loss into a cash loss.

I think the well-paid managers of the fund are kicking themselves in the ass over this speculation. They got creamed on this stinker, and this could be just the beginning of the losses.

Adding to the carnage was a monster sized bet short EURUSD. Last reported, this mega-position was $220B short! It’s possible that this number is now close to one-quarter trillion. It was a good Q for the EURUSD, and that means a bad Q for the fund. The 6+ big figure move up in the Euro versus the dollar translates into a paper loss of a staggering $11b!

All in, the losses from FX come to $16.5B. The fund has reserves of about $50b, so the quarterly swing is not a crisis, but it’s an eye-opener. 30+% of those reserves went out the window in one Q. Wow!

The fund in question has a strong capital base and loyal investors. But the management will have to explain to those investors how it managed to lose such a large percentage of its “cushion” in such a short period of time. Those investors will, no doubt, ask the very pertinent question: “Why is the fund making such big FX bets?”

Management is also going to have to address the issue of leverage – this fund is now running at 10 to 1. The high level of leverage, and the mega billions involved (much of which is tied up in derivatives), makes this fund a high risk/return player. Investors will have to ask themselves, “Do we still want to be on this roller coaster?”

So who is it that is running such a big FX book? And who are the investors that are on such a wild ride?

That would be the Swiss National Bank. The “investors” are the Swiss people.

I know, I know. Central Banks aren’t hedge funds, and they can’t take losses because they can always print more money. I respond to this by saying that the SNB is acting very much like a leveraged hedge fund.

It’s making currency “bets” with the people’s money. It’s taking some very big risks. In an attempt to diversify one risk, they are just adding different risks, and that effort is backfiring.

Like the US Fed, the SNB sends its annual profits back to the people (Treasury in USA, Cantons in Switzerland). The book losses at the SNB will reduce the amount of the payouts to the Cantons, so the losses will be felt.

Switzerland is a small country with a GDP of about $600B. If the FX losses at the SNB were applied to the US economy, it would translate into a half-trillion dollar loss. That would be a very big deal indeed. The FX losses since September come to $2,000 for each and every Swiss citizen. The word “Shellacking” comes to mind.

I bring up this story to make a point. (Don’t worry about the SNB) What happened at the SNB is because the SNB absorbed risk from the Swiss economy (the currency peg). As the SNB absorbs risk, it will, by definition, have to take losses from time to time.

The SNB has absorbed currency risk; other central banks have taken credit, liquidity and duration risk out of their respective markets. In the aggregate, the risk transfers have been massive. That’s why the global capital markets are so “calm”.

To me, the private sector looks “okay” for the time being. It’s the Public Sector that has the potential to produce a black swan over the next year or so. I conclude that the “confidence” factor is going to be an issue. The questions hanging in the air include, “Are all these governments really money-good?” “Are the key governments and their leaders able to maintain confidence in this fragile system?” “Are ‘they’ going to do the ‘right’ things?”

The world’s largest economy has just set itself up for a crisis in 60 days. China Inc. is sitting on a gazillion of dodgy loans. Japan Inc. is in hock up to its eyeballs (and is in the process of slow motion devaluation). The EU will, this year, be forced to make good on its promise of “Unlimited” printing. Where’s the confidence in that pile?

This confidence “thing” is hard to anticipate. It comes and goes quickly. The year is starting out with a fairly high level of “warm feelings”. I’m not at all convinced that those feelings are justified. The list of things that could trip up the Public Sectors, and their deciders, is too long.

http://brucekrasting.com/big-hedge-fund ... -feelings/

[winston]

Is Japan About to Fire the First Shots in a 1930s Style Currency War ? By Keith Fitz-Gerald


http://moneymorning.com/2013/02/12/is-j ... rency-war/

[winston]

How to Make a Fortune If the Currency Wars Go Atomic By SHAH GILANI

The net result is inflation, which arrives in several different ways. You’ll know when it’s starting to spread.

Interest rates will start to rise; watch the yield on the U.S. 10-year treasury.

Commodity prices will rise; you’ll see it in your grocery bills. You may already be seeing the incipient signs.

Stocks will rise at first — then start to collapse. So, make sure you’re in the market but keep raising your protective stops as prices rise.

Buy commodities and gold, but take profits on your commodities as they skyrocket; they won’t stay high forever.

Don’t pay off your mortgage, make the minimum payments. You can pay it off later with cheaper dollars.

Accumulate as much cash as you can, and when prices crash — which will include real estate – be ready to buy, buy, buy.

That’s how to turn an atomic implosion that could result from currency wars into a personal fortune.

http://www.thetradingreport.com/2013/02 ... go-atomic/

[winston]

The Other Currency War by John Rubino

According to the IMF, dollars make up about 62% of allocated central bank currency reserves, with the other 38% in mostly euros and pound sterling.

The yen accounts for 4%, and the Chinese yuan virtually zero. But China is now the world’s biggest trading power, with Brazil and India not that far behind.

So why does the dollar still get to dominate world trade, with all the advantages that confers? Because it’s been that way since World War II, and old habits die hard. But as bi-lateral trade deals like the above become common, countries trading with China and Brazil in local currencies instead of dollars will need large yuan and real reserves and correspondingly fewer dollars.

If central banks start selling dollars to buy other currencies, this will, other things being equal, force down the dollar’s value. Which, ironically, helps the US in the other currency war theater, where victory is defined as a cheaper currency.

http://dollarcollapse.com/inflation/the ... rency-war/

[profittaker]

Australia is also going to do trade in aud/rmb and no more USD.

[winston]

The Best Currencies to Invest in for 2013 By Don Miller

Currency markets in the first half of 2013 have been roiled by central bankers' delusional efforts to prop up their lackluster economies.

That means the best currencies to invest in for 2013 - or, the remainder of the year - will be in Asia and Canada - countries where the governments have refused to engage in debasing their currencies in a "race to the bottom."


http://moneymorning.com/2013/07/15/the- ... or-2013-2/

[winston]

Ron Paul: Bitcoin could 'destroy the dollar'

http://money.cnn.com/2013/12/04/technol ... bertarian/