Commodity Trade Mantra

Posts Tagged ‘Foreign Exchange Reserves’

The SDR Is Designed As A Rescue Operation For The US Dollar

The IMF created the SDR Substitution Account in 1969. T he core idea is that the SDR Substitution Account Central Banks allows to diversify their existing US dollar reserves in a one-time conversion away from the dollar into IMF’s SDR, comprised of the US dollar, European euro, Japanese yen and British pound, in an off-market transaction, so as not to depress the dollar’s exchange rate.

Emerging Market Meltdown May Plunge Global Economy Into Recession

When the Fed effectively telegraphed its new reaction function last month, the FOMC served notice to the world that it was not only acutely aware of what’s going on in emerging markets, but also extremely worried about the possibility that hiking rates could end up triggering something far worse than the “tantrum” that unfolded across EM in 2013.

Will the Fed Have to Save Emerging Markets with QE4?

As emerging markets and nations attempting to defend their currency pegs to the USD sell U.S. Treasury bonds (which have been held as foreign exchange reserves), the yields on the Treasuries rise as a matter of supply and demand. As supply increases, sellers must offer higher yields to entice buyers. This dynamic undermines both the emerging markets and the U.S.

The U.S. Dollar Under Siege - Long-Term Financial Implications

The US debt will continue its rapid growth that began in 2008. Historically, foreigners have been a reliable source of US Treasury purchases. But with the US issuing so much debt, foreigners have become saturated with US dollars and so have slowed their buying considerably.

Iraq Buys Massive 36 Tonnes Of Gold In March

The Central Bank of Iraq said it bought 36 tons of gold this month to help stabilize the Iraqi dinar against foreign currencies & thus more than doubled their gold reserves. Iraq’s purchases this month alone surpasses the entire demand of many large industrial nations in all of 2013.

RBI's Foreign Exchange Reserves In Gold Fall 15%

RBI, India’s central bank’s foreign exchange reserves in gold fell 15% in value between Mar & Sept last year & the yield on reserves fell 2 basis points amid low interest rates across the developed world. Gold accounted for about 8% of the total foreign exchange reserves in value terms in Sept last year.

Russia May Retaliate Sanctions By Demanding Payment For Exports In Gold

The EU agreed on a framework yesterday for its first sanctions on Russia since the Cold War. In retaliation to sanctions, Russia could opt to only accept gold bullion for payment for their gas, oil and other commodity exports. This would likely lead to a sharp fall in the dollar and a surge in gold prices.

How to Be Your Own Central Bank

If we were to cobble together the advice from Mr. Mminele, Mr. Draghi and the ‘Nospeak’ implications from the Chinese, we can create a ‘how-to-manage’ your own portfolio manual just as central banks do.

Gold Is Not A Safe Haven? Tell That To People In Indonesia

Rupiah, the currency of Indonesia has weakened nearly 15% against the dollar since the start of June and 20% against gold since June 28th; And by nearly 600% against gold since 2000 – Can someone tell the people of Indonesia that Gold Is Not A Safe Haven?

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