Category: Currency

US dollar slides amid escalating trade tensions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar index fell against most other major currencies as escalating trade tensions between China and the US weighed on the market, amid weaker-than-expected March jobs report.

In late New York trading on Friday, the euro rose to $1.2285 from $1.2236 in the previous session, and the British pound increased to $1.4085 from $1.4001 in the previous session, Xinhua news agency reported.

The Australian dollar was down to $0.7670 from $0.7682.

The US dollar bought 106.87 Japanese yen, lower than 107.44 Japanese yen of the previous session. The US dollar fell to 0.9587 Swiss franc from 0.9635 Swiss franc, and it climbed to 1.2778 Canadian dollars from 1.2761 Canadian dollars.

US President Donald Trump had threatened to slap tariffs on $100 billion of imports from China, ratcheting up trade tensions and plunging economic growth into uncertainty.

China will fight “at any cost” and take “comprehensive countermeasures” if the US continues its unilateral, protectionist practices, a spokesperson with the Chinese Ministry of Commerce said on Friday.

The moves came after both sides earlier this week unveiled a list of products worth $50 billion imported from the other side that will be subject to higher tariffs.

The disappointing nonfarm jobs report also dented investor sentiment. US total nonfarm payroll employment edged up by 103,000 in March, way below market consensus of an increase of 193,000 jobs, the US Labor Department said on Friday. The unemployment rate was unchanged at 4.1 per cent in March.

“Given the Fed’s fear of the Phillip’s curve, March’s modest employment growth is likely to be hailed as good news among the denizens of the Eccles building after February’s outsized gain. Yields are down about 3bp along the entire curve, suggesting the traders are considering the possibility of both a slower pace of tightening and a lower cycle high for fed funds,” said Chris Low, chief economist at FTN Financial.

Investors also paid close attention to the latest speech of Federal Reserve Chairman Jerome Powell, who said on Friday that the central bank will likely need to keep raising interest rates to keep inflation under control.

The dollar index, which measures the greenback against six major peers, decreased 0.39 per cent at 90.106 in late trading.

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Cryptocurrency miner Canaan eyes IPO; bets on China’s push for chip industry

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Canaan Creative, one of the world’s top cryptocurrency mining equipment makers, said it was considering an initial public offering and expected China’s push to promote the domestic chip industry to help drive growth for the company.

Hangzhou-based Canaan has seen a surge in demand for its mining machines amid a boom in cryptocurrencies, with bitcoin spiking more than 1,300% in 2017. The price of the digital currency has, however, halved so far in 2018.

Canaan shrugged off the recent volatility stemming from growing scrutiny of the sector, betting lower prices would bring in more demand. The company says it supplies around a quarter of the global bitcoin blockchain computing power.

Canaan is considering an IPO in Hong Kong or the United States, co-chairman Jianping Kong said in an interview.

“We … prefer listing outside mainland China as we are in a global business,” Kong said, without giving details on when or how much it expects to raise.

The company had in 2016 tried to list on the mainland through a 3.06 billion yuan ($485 million) back-door listing, but cancelled the plan after a regulatory deadlock. It also scrapped another plan to list on the New Third Board in China, Kong confirmed on Friday.

Kong said the decision was not driven by China’s regulatory crackdown on bitcoin, but because listing in the country takes too long, adding Canaan may consider a secondary mainland listing by issuing depository receipts.

“As an integrated circuit company, we are supported by government policies,” he said.

China’s semiconductor push 

China has introduced tax breaks for chipmakers producing in the country in a bid to cut dependence on foreign manufacturers as trade tensions with the United States soar.

This bodes well for makers of high-end chips used in cryptocurrency mining as China is also home to one of the world’s largest centres for such mining —where people solve complex mathematical puzzles with computers in order to be awarded virtual coins.

While cryptocurrency trading has come under scrutiny in China amid worries of financial risks, an underground ecosystem of peer-to-peer platforms has sprung up to allow bitcoin trading to thrive.

Canaan’s clients include individuals in China and companies outside the country, with many of its machines ending up in electricity-rich areas that have formed large bitcoin mines, such as Xinjiang, Inner Mongolia, Sichuan and Yunnan.

N G Zhang, the company’s 35-year-old founder and CEO, said Canaan employs around 200 in Beijing and Hangzhou, mostly in chip research and development, and is hiring more.

Canaan, which sells “Avalon” mining machines with customised super-fast ASIC chips, made revenue of more than 1 billion yuan in 2017.

Its main competitors include US-based Bitfury and Beijing-based Bitmain, which makes the “AntMiner”.

Canaan is now looking to add more products to its portfolio, such as home appliances with blockchain computing power and AI functions like “coin-mining TVs” that mine cryptocurrencies “while you sleep”, Kong said.

Canaan is developing its own AI chips and planning to launch equipment to mine other cryptocurrencies such as litecoin.

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US dollar ends steady against the rupee

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar ended steady against the rupee at 64.97/98 per dollar but the pound sterling finished lower at 90.96/98 per pound at the close of the Interbank Foreign Exchange (forex) market here today.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

UK watchdog says licence needed to trade cryptocurrencies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Britain’s financial watchdog said that firms offering services linked to cryptocurrency derivatives must meet all relevant rules in the regulator’s handbook or could face sanctions.

The Financial Conduct Authority (FCA) does not currently regulate cryptocurrencies.

But it said that dealing or arranging transactions in, advising on or providing other services related to derivatives referencing cryptocurrencies or tokens issued through an initial coin offering (ICO), would likely require its authorisation.

This includes cryptocurrency futures, cryptocurrency contracts for differences (CFDs) and cryptocurrency options, it said.

The FCA warned consumers last September that ICOs were high risk and speculative.

Europe’s top markets watchdog warned in November that new crypto coins could turn out to be worthless.

Demand for cryptocurrencies has pushed up prices for currencies such as bitcoin to a record high of more than $19,000 in 2017, before concerns that regulators may step in sent markets tumbling.

In March, financial policymakers from the world’s 20 leading economies called on national regulators to monitor the development of crypto-assets and their risks, but stopped short of coordinated action due to a lack of consensus.

The FCA’s move follows an announcement last month by finance minister Philip Hammond, who said Britain would set up a task force both to manage the risk around cryptoassets and exploit the underlying blockchain technology.

In its statement, the FCA said: “It is firms’ responsibility to ensure that they have the appropriate authorisation and permission to carry on regulated activity.”

“If your firm is not authorised by the FCA and is offering products or services requiring authorisation it is a criminal offence. Authorised firms offering these products without the appropriate permission may be subject to enforcement action.”

Jake Green, regulation partner at law firm Ashurst, said: “To some degree this (FCA statement) clears up a small degree of academic uncertainty. Regardless, it must be the correct decision and shouldn’t come as a shock to many.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Rupee surges 18 paise on bullish RBI growth call

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian rupee on Thursday recovered from deep overnight losses and ended higher by 18 paise at 64.97 against the US dollar after the RBI lowered its inflation forecast and revised up its growth outlook.

Highly positive market sentiment largely dominated the forex trading from the beginning on the back of cooling of trade tensions between the US and China with global markets stabilising.

A breathtaking rally in domestic equities along with a slew of positive domestic cues including — forecast of a normal monsoon and encouraging services sector PMI data — added to the recovery momentum despite higher dollar overseas.

The home currency touched a high of 64.95 in early trade against the greenback.

The 10-year benchmark bond yield tumbled sharply to 7.13% from its previous close of 7.29%.

The Reserve Bank concluded its two-day monetary policy meeting on Thursday, by leaving the key benchmark rate unchanged at 6% for the fourth consecutive time since August last year.

While, the policy outcome was along expected lines, the apex bank outlined for the new fiscal a higher growth rate of 7.4% in the current financial year and lower inflationary forecast at 4.7-5.1% for the first half of the fiscal, boosting overall forex market sentiment.

The rupee opened on a strong note at 65.03 as compared to Wednesday’s close of 65.15 at the inter-bank foreign exchange (forex) market on fresh dollar selling by exporters and banks.

It oscillated between a high of 64.95 and a low of 65.13 most part of the day with good amount of volatility in the face of RBI meet outcome.

The local unit finally settled at 64.97, revealing a steep rise of 18 paise, or 0.28%.

On Wednesday, the rupee fell 14 paise against the USD.

The RBI, meanwhile, fixed the reference rate for the dollar at 65.0601 and for the euro at 79.7767.

Globally, the dollar rallied against a basket of other major currencies amid hopes that the US and China will reach a compromise to overcome rising trade tensions.

The dollar index, which measures the greenback’s value against a basket of six major currencies, was up at 90.08 in early trade.

Meanwhile, crude oil prices steadied on fading trade tensions between the US and China even as a surprise draw in US crude inventories last week supported the market.

In the cross currency trade, the Indian unit recouped against the pound sterling to end at 91.25 from 91.48 and pulled back against the euro to finish at 79.68 as compared to 80.03 earlier.

It also recovered against the Japanese yen to close at 60.68 per yens from 61.35 on Wednesday.

Elsewhere, the common currency euro drifted to fresh one-week low against the US Dollar after the services PMI report saw sharp deceleration in economic activity in March as both manufacturing and services sectors are cooling off from the cyclical high amid fading US-China trade tensions.

The pound sterling also maintained its downtrend after the UK services PMI fell to the lowest level in last 20 months. The UK services PMI dropped from 54.5 in February to 51.7 in March.

In forward market Thursday, premium for dollar fell sharply owing to sustained receiving from exporters.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US dollar ends sharply cheaper against rupee

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI sets rupee reference rate at 65.0601 against US dollar

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India today fixed the reference rate of the rupee at 65.0601 against the US dollar and 79.7767 for the euro.

The corresponding rates were 65.0232 and 79.7900, yesterday.

The according to an RBI statement, the exchange rates for the pound and the yen against the rupee were 91.5005 and 60.78 per 100 yens, respectively, based on reference rates for the dollar and cross-currency quotes at noon.

The SDR-rupee figure will be based on this rate, the statement added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI ‘effectively’ bans cryptocurrencies in India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In view of the associated risks with the use of cryptocurrency, the Reserve Bank of India on Thursday decided that entities regulated by it shall not deal with, or provide services to any individual or business entities dealing with, or settling virtual currency, with immediate effect.

The central bank, however, said that regulated entities which already provide such services shall exit the relationship within a specified time. A separate circular will be issued in this regard.

RBI has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies.

>>Read: RBI keeps policy rates unchanged; read the full document here

The central bank, in December last year, issued its third warning with regard to cryptocurrency, saying that using the virtual currency as a medium of exchange was not authorised by the body.

“No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities,” it said in a statement.

NS Nappinai, Cyber Law Advocate, said that she wouldn’t call this a ban but this move “will effectively close the doors for a lot of cryptocurrency exchanges or brokerage platforms.” The move, she said, will also take into account the payment system, i.e., payment wallets and debit or credit systems, “all of it can be blocked.”

In December last year, bitcoins grabbed headlines with the prices going as high as $15000 per bitcoin, 9,78,525 Indian rupees to be exact, going by the current rupee value.

Cryptocurrencies have been surrounded by a lot of controversies, primarily because of its decentralized system as it transfers the power of central banks to the public allowing them to make money. Naturally, this takes the control of the currency out of the reach of the tax men and financial authorities.

Hinting at the likely ban on cryptocurrencies, Jaitley in Union Budget had said that the government did not consider digital currencies legal tender or coin and stated that centre may take steps to eradicate the unethical financial activities through the these currencies.

>>Also Read: Inflation worries, fiscal slippage push RBI to keep repo rate unchanged at 6%

The central bank on Thursday kept the policy repo rate unchanged at 6% in the first bi-monthly meeting this financial year.  The reverse repo rate also remains unchanged at 5.75%.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Rupee surges 15 paise against dollar in early trade

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The rupee strengthened by 15 paise to 65 against the dollar at the interbank forex market today on fresh selling of the greenback by exporters and banks ahead of the RBI’s monetary policy outcome later in the day.

Dealers said dollar’s weakness against some other currencies overseas and early gains in domestic equity markets supported the rupee.

Yesterday, the rupee fell 14 paise to end at 65.15 against the US dollar.
The benchmark BSE Sensex recovered by 393.60 points, or 1.19%, to 33,412.67 in opening trade today.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US dollar falls amid trade worries

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar index declined against most other major currencies as investors assessed trade tensions between China and the US.

In late New York trading on Wednesday, the euro increased to $1.2281 from $1.2268 in the previous session, and the British pound rose to $1.4074 from $1.4056 in the previous session, Xinhua news agency reported.

The Australian dollar was up to $0.7707 from $0.7680.

The US dollar bought 106.74 Japanese yen, higher than 106.58 Japanese yen of the previous session. The US dollar gained to 0.9605 Swiss franc from 0.9592 Swiss franc, and it fell to 1.2791 Canadian dollars from 1.2811 Canadian dollars.

China on Wednesday unveiled a list of products worth $50 billion imported from the US that will be subject to higher tariffs, including soy bean, automobiles and chemical products.

The move was taken after the US administration announced a proposed list of products subject to additional tariffs, which covers Chinese exports worth $50 billion with a suggested tariff rate of 25 per cent.

The date of implementation will depend on when the US government imposes the tariffs on Chinese products, the Ministry of Finance said.

The dollar index, which measures the greenback against six major peers, decreased 0.07 per cent at 90.139 in late trading.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow