2010-03-11 08:15:45.721 GMT
March 11 (Bloomberg) -- The following are the day's top stories on currencies:
Yen, Dollar Strengthen as China Inflation at 16-Month High; Kiwi Weakens
The yen and dollar rose versus their major counterparts after Chinese reports on inflation, factories and loans fueled concern the government will act to damp growth, boosting demand for the lowest-yielding currencies. Japan's currency strengthened from a two-week low against the euro after Chinese inflation reached a 16-month high and on speculation exporters brought funds home before the fiscal year ends this month. New Zealand's dollar fell for a second day versus the greenback as the central bank signaled a slower exit from stimulus measures.
South Korea's won slid on a media report the nation's largest power company purchased dollars. ``Strong inflation data should enhance pressure for tightening in China,'' said Minoru Shioiri, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Securities Co., unit of Japan's largest publicly traded bank by market value. ``The bias is for the yen to rise.'' The yen rose to 123.26 per euro as of 6:58 a.m. in London from 123.62 in New York yesterday, when it fell to 124.00, the weakest since Feb. 23. Japan's currency advanced to
90.38 per dollar from 90.52. The dollar climbed to $1.3636 per euro from $1.3657, and advanced to $1.4961 per pound from $1.4978.
Dollar to Keep Reserve Role If Markets Stay Sound, Standard & Poor's Says
The dollar will retain its status as the world's reserve currency as long as U.S. financial markets are sound and government spending is sustainable, Standard & Poor's said. The greenback is ``the world's most accepted currency,'' even after the global recession that began in the U.S., John Chambers, chairman of the S&P sovereign ratings committee, wrote in a report released today. The dollar supports the nation's top AAA credit ranking, improves the government's access to external financing and helps lower borrowing costs, he wrote. ``The dollar's widespread acceptance stems from the U.S. economy's fundamental strength, which in our view comes from the economy's size and the flexibility of labor and product markets,'' New York-based Chambers wrote with David Beers, global head of sovereign ratings at S&P in London. ``We view U.S. banking and capital markets to be dynamic and unfettered relative to their peers.'' Pacific Investment Management Co., the world's biggest manager of bond funds, said in its August
2009 Emerging Markets Watch report the dollar's reserve status was endangered as the government pumped ``massive'' amounts of money into the economy to stimulate growth.
Trade Deficit in U.S. Probably Widened for Third Month as Imports Climbed
The U.S. trade deficit probably widened in January for a third month as imports grew faster than exports, pointing to a rebound in global economic growth, economists said before a report today. The gap increased to $41 billion from $40.2 billion the prior month, according to the median forecast of 73 economists surveyed by Bloomberg News. Another report may show initial claims for jobless benefits fell for a second week.
Imports may keep growing as the world's largest economy improves and companies replenish depleted inventories. Emerging countries are leading a worldwide recovery that, together with a weaker dollar, is helping lift sales at companies including Cisco Systems Inc., which may prevent the deficit from deteriorating much more in coming months. ``Global trade is definitely coming back,'' said David Semmens, an economist at Standard Chartered Bank in New York. ``The U.S. will benefit from rising exports. We can expect overseas economies to improve faster than domestic growth.''
El-Erian Says World Economy May Face Disruptive Sovereign Debt Imbalances
Mohamed A. El-Erian, whose company runs the world's biggest mutual fund, said deteriorating public finances may affect the global economy more than is currently realized. ``The importance of the shock to public finances in advanced economies is not yet sufficiently appreciated and understood,''
El-Erian, co-chief investment officer at Pacific Investment Management Co., wrote in an article on the Financial Times Web site. The potential damage from increased government borrowings is ``at present being viewed primarily -- and excessively -- through the narrow prism of Greece.'' Governments may have to raise taxes and slash spending to cope with swelling deficits after borrowing unprecedented amounts to stave off the global financial crisis, said El-Erian, 51, who shares his job title with Bill Gross. A failure to carry out fiscal measures in time would raise the possibility of governments seeking to eliminate excessive debt through inflation or default, he said. Pimco has said debt strains in Greece, Portugal and Spain underscore its view that 2010 will be a year of slower-than- average growth, and predicts there will be a shrinking global role for the U.S.
Emerging-Market Reserves Buildup Risks Return of `Imbalance': Chart of Day
Developing nations' foreign reserves are approaching levels reached two years ago, risking a return of the ``imbalances''
that helped spark the global financial crisis, Goldman Sachs Group Inc. said. The Chart of the Day shows the five largest foreign reserves holders in emerging markets excluding China boosted their stockpile by 17 percent in the past year to $1.3 trillion, while the U.S. trade deficit swelled to its widest level in a year in December. The lower panel shows China, the world's largest reserves holder, increased its stock to a record $2.4 trillion in 2009. The trend signals a return to the last global economic expansion when U.S. consumers relied on borrowing from abroad to finance their purchases, contributing to an export boom from Asia. As China and other Asian nations accumulated dollars from trade surpluses, they bought U.S.
Treasury debt and depressed global yields. Lower borrowing costs helped fuel the U.S. housing and credit booms that turned to bust in 2007. ``There's a risk the world could lapse back into a regime in which emerging markets return to export-led growth coupled with an accumulation of reserves,'' Goldman Sachs economists led by London-based Jim O'Neill wrote in a research note yesterday. ``To the extent that global imbalances are making a comeback, they need to be taken seriously. The bottom line is that the accumulation of reserves may have helped create the problem that they ultimately helped to solve.''
Senate Negotiations Said to Advance on Consumer Division Powers, Oversight
Senate negotiators closed in on a deal for strengthening consumer financial protections, giving bank regulators a role in rule-making and enforcement, two Democratic Senate aides briefed on the talks said. The talks have advanced on key sticking points, including how much control prudential regulators -- those responsible for insuring banks are financially sound -- would have over a new consumer division at the Federal Reserve, said the aides, who declined to be identified because the talks are private. ``There will be a mechanism whereby the prudential side has the ability to weigh in to ensure we don't do anything to destabilize the safety and soundness of our financial institutions,'' Senator Bob Corker, a Tennessee Republican working on the legislation, told reporters yesterday after a panel discussion at a Washington conference. Corker and Senate Banking Committee Chairman Christopher Dodd, in meetings over the past week, resolved some differences over the unit's autonomy, although no final decisions have been made. Corker said yesterday the legislation will be introduced ``very soon'' and that the goal is to get the measure through the banking committee by March 29, when the Easter recess begins.
Brown Tries to `Perversely' Benefit From U.K. Relapse Risk Before Election
Gordon Brown is trying to turn the threat of a double-dip U.K. recession into an advantage. The British prime minister, whose Labour Party is narrowing the gap in opinion polls with the opposition Conservatives, is arguing that the economic recovery is too ``fragile'' to justify cutting the U.K.'s record budget deficit right away. Brown is seeking a fourth term for Labour as Britain struggles to recover from its worst slump in six decades. While jobless claims are at the highest since the party came to power in 1997, opinion polls show that Brown has made up so much ground that David Cameron's Conservatives will fail to gain a majority in the election, which must happen by June. ``A weak economy might perversely be good for Labour,'' Jonathan Loynes, an economist at Capital Economics Ltd. in London, said in a telephone interview. ``To a degree it would support the government's position that it shouldn't try to tackle the budget deficit too quickly, and at the same time undermines the Conservatives' position.''
Swiss Central Bank May Keep Key Rate Unchanged As Economy Gains Strength
The Swiss central bank may leave its benchmark interest rate near zero today to bolster a recovery from the worst recession in more than three decades. The Swiss National Bank, led by Philipp Hildebrand, will leave the three-month Libor target rate at 0.25 percent at its quarterly monetary assessment, according to all 19 economists in a Bloomberg News survey. The central bank announces the decision at 2 p.m. in Zurich. The SNB has held its main rate close to zero for a year and sold Swiss francs to keep a lid on the currency and counter the threat of deflation. While SNB board member Thomas Jordan said last month that it's too early to start raising borrowing costs, the central bank has already softened its tone on currency interventions as the economy gathers strength. ``They will continue pointing to the risks to the economy, but the statement will be on a more positive note,'' said Fabian Heller, an economist at Credit Suisse Group AG in Zurich, who sees the SNB rate unchanged until ``at least'' September.
``They will maintain their language on the currency'' though policy makers may become ``more tolerant'' of a further appreciation over time, he said.
Shun Spain's Bonds on `Death by 1,000 Cuts,' Invesco, Merrill Lynch Say
Investors should avoid Spain's bonds as the euro region's highest levels of joblessness stifle the country's ability to cut its budget deficit, according to Invesco Ltd. and Bank of America Corp.'s Merrill Lynch unit. Spanish debt isn't yielding enough to compensate investors for buying the bonds of a country with the euro region's third- largest budget deficit, according to Axel Blase, a fund manager in Frankfurt at Invesco. Investors receive a 70 basis-point yield premium for holding Spanish 10-year bonds rather than German bunds, compared with 310 basis points for Greek debt. ``It's not a time to increase exposure to Spain,'' said Blase, who helps oversee the company's $423 billion in assets. ``The country is in rather serious difficulties and the risk premium on Spanish bonds isn't that attractive.'' Concern that Europe's most recession-battered nations aren't doing enough to contain their deficits sent Greek bond yields to the highest in more than a decade, and helped push the euro 4.7 percent lower against the dollar this year. While attention focused initially on Greece, Spain may take years to recover from the recession, according to Johan Jooste, a strategist at Merrill Lynch Wealth Management in London.
Latvia Elections May Hamper Austerity, Weigh On Credit Rating, Fitch Says
Latvian elections this autumn threaten to hamper government efforts to push through austerity measures vital to its international bailout, burdening the country's credit rating, Fitch Ratings said. A parliamentary election scheduled for October ``weighs on the rating, the uncertainty that comes with the election, and I think there might be resistance to removing the negative outlook because of that risk,'' Eral Yilmaz, a credit analyst at Fitch, which ranks Latvian debt as junk, said in an interview. Prime Minister Valdis Dombrovskis, who came to office a year ago amid the former Soviet state's worst economic crisis since it abandoned communism two decades ago, has pushed through the toughest austerity package in the European Union to comply with the terms of an International Monetary Fund-led rescue. Fitch, which rates Latvia's debt BB+, wants to see sustained signs of recovery before considering an upgrade, Yilmaz said. ``Cuts may become politically more difficult from now on as the public may want to see the results of the fiscal
belt- tightening in an economic recovery that results in job creation,'' she said.
Kiwi Slides as Bollard Signals Rate Rises; Aussie Is Near Seven-Week High
The New Zealand dollar fell against its 16 major counterparts as the central bank signaled a slower exit from stimulus measures. Australia's currency traded near a seven-month high as full-time jobs grew for a sixth month. The kiwi dropped as Reserve Bank Governor Alan Bollard kept the benchmark interest rate at a record low and said weak business spending and higher bank-funding costs may slow the pace of future rate advances. Australian employers added 11,400 full-time workers in February in the longest stretch of monthly gains since 2006, raising prospects of a rate increase in April. ``Market expectations prior to the decision had been for a 25 basis point hike in June and every meeting thereafter until the end of the year,'' said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``One of those tightenings may now be priced out of the curve, weighing on the New Zealand dollar.'' New Zealand's dollar dropped 0.4 percent to 69.93 U.S. cents as of 5:08 p.m. in Sydney from
70.21 cents yesterday in New York. It slid 0.5 percent to 63.19 yen.
For the complete stories summarized here, and for more of the day's top news, see TOP
-0- Mar/11/2010 8:15 GMT
Coloque sua foto num tema anos 60, 70 e 80. Conheça o novo site de I Love Messenger.