When the going gets tough, the tough run to the Dollar... Thanks for pointing this out Frank.
On Oct 20, 7:08 am, Kamakazee <[EMAIL PROTECTED]> wrote: > While you're busy cutting and pasting article after article regarding > the global economies you might take a second to read one of them. > You'll find the common thread is that through each and every one of > them the US is, either expressly or implicitly, forcasted to the > better, if not the best, of all the ones referenced. > > Even in this caption, you'll note "Dollar Hoarding ...... as the sun > sets on the US Reich". > > Even for you, does this make any sense? > > On Oct 20, 8:43 am, "\"Lone Wolf\"" <[EMAIL PROTECTED]> wrote: > > > > > Dollar Hoarding Fuels Won, Rupee, Real Drop on Losses ............ as > > the sunsets on the US Reich > > By Kim Kyoungwha and Wes Goodman > > > Oct. 20 (Bloomberg) -- Exporters in emerging markets are hoarding > > dollars as losses on currency bets worsen the slump in the South > > Korean won, Brazilian real, Mexican peso and India's rupee. > > South Korean phone parts maker KJ Pretech Co. resisted converting > > dollars to won after record swings in currency markets ruined its > > trading strategies. In Brazil, Aracruz Celulose SA, a pulp producer, > > Sadia SA, a poultry company and Grupo Votorantim, a cement maker, had > > $2.3 billion in losses on hedges intended to protect earnings from > > exchange-rate moves. India's biggest carmaker, Maruti Suzuki India > > Ltd., plans to wait for a weaker rupee before bringing profits home > > from outside the country. > > Western Asset Management Co. and Union Investment, which manage more > > than $800 billion combined, are selling emerging- market currencies as > > the global economy slows and demand for dollars increases. Zurich- > > based UBS AG predicts the rupee will weaken 2.1 percent to a record > > low of 50 per dollar by March, adding to a 19 percent drop this year, > > while the won will depreciate 6 percent to 1,400, extending a 29 > > percent slump. > > ``This is all caught up in the broader trend for the global grab for > > dollars,'' said Edwin Gutierrez, a money manager who oversees $5.5 > > billion in debt in London at Aberdeen Asset Management, the Scottish > > fund company focused on emerging markets. ``Expect more weakness.'' > > Currency Slump > > The won slumped 9.7 percent on Oct. 16, the most since the > > International Monetary Fund bailed the nation out in 1997. It has > > gained 4 percent in the past two days to 1,315 as the government > > mapped out a plan to support banks. India's rupee, which has slumped > > for 10 weeks, fell 0.2 percent today to 48.96 after the central bank > > cut its benchmark rate for the first time since 2004 today to support > > its economy. > > The Brazilian real closed at 2.1190 on Oct. 17, bringing its 2008 drop > > to 16 percent. Mexico's peso ended the week at 12.88 per dollar, for a > > year-to-date decline of 15 percent. > > Emerging markets tumbled after Lehman Brothers Holdings Inc. filed for > > bankruptcy, deepening a freeze in credit markets. Investors turned to > > the safest, dollar-denominated securities even though the U.S. economy > > is growing more slowly than those of developing nations and the > > Federal Reserve's 0.5 percent benchmark interest rate compares with 5 > > percent in South Korea, 8 percent in India and 13.75 percent in > > Brazil. > > Three-month Treasury bill rates fell to 0.02 percent on Sept. 17, from > > 1.91 percent in August. The ICE futures exchange's Dollar Index, which > > tracks the greenback against the currencies of six U.S. trading > > partners, climbed 14 percent since June to 82.41, after falling 5.5 > > percent in the first half. > > Rising Volatility > > Rapid moves in exchange rates are perilous for exporters because they > > can't adjust their hedging strategies fast enough. The JPMorgan > > Emerging Market Volatility Index soared to a record 32.01 percent on > > Oct. 10 before ending the week at 25.63. The index never exceeded > > 15.66 until Lehman's bankruptcy, according to data compiled by > > Bloomberg. > > ``It doesn't matter what your fundamentals are,'' said Sergey > > Dergachev, an emerging-market money manager at Union Investment in > > Frankfurt, which has $233 billion in assets. ``Investors are trying to > > get rid of anything that is associated with market risk.'' > > Central banks and governments around the world are pumping > > unprecedented amounts of cash into the financial system to combat the > > credit crisis. The moves are starting to bring down money market > > interest rates, which may revive demand for higher- yielding assets > > such as emerging-market currencies. > > The three-month London interbank offered rate for dollars fell every > > day last week, to 4.42 percent from 4.82 percent. The Dow Jones > > Industrial Average climbed 4.8 percent for its best weekly performance > > since 2003. > > Debt Guarantees > > South Korea's government yesterday announced it will grant a three- > > year guarantee for as much as $100 billion in debts used by the > > nation's lenders until June 30. > > ``The Korean won may rise a bit as it helps local banks secure dollars > > more easily,'' said Seo Chul Soo, a debt strategist in Seoul at Daewoo > > Securities Co., South Korea's third-biggest brokerage. ``Still, it > > can't solve the fundamental problem until the global financial market > > stabilizes.'' > > Brazilian losses on currency derivatives may reach 60 billion reais > > ($27 billion), said Paulo Vieira da Cunha, a former central bank > > director who is now a partner at New York- based hedge fund Tandem > > Global Partners. Korean companies may lose as much as 3 trillion won > > ($2.2 billion) on contracts that are only profitable when the currency > > stays in a range, said Kwon Jae Min, a credit analyst at Standard & > > Poor's in Hong Kong. > > `At a Loss' > > Taesan LCD Co., the Korean supplier of flat-screen parts to Samsung > > Electronics Co., failed on Sept. 16 because of losses on derivatives, > > financial instruments derived from stocks, bonds, loans, currencies > > and commodities, or linked to specific events like changes in the > > weather or interest rates. KJ Pretech is losing $383,000 a month on > > similar trades. > > ``We are making up for currency losses with dollars from overseas > > sales,'' Lee Jeong Dae, head of the Hwaseong-based KJ Pretech's > > finance team, said in an Oct. 14 telephone interview. ``For now, it's > > manageable but we're at a loss how to get it through should export > > orders fall.'' > > Mumbai-based Sundaram Multi Pap Ltd., which makes school note books, > > is one of 12 companies that filed lawsuits against banks accusing them > > of hiding risks on the currency products they marketed. Citic Pacific > > Ltd., the Hong Kong arm of China's biggest state-owned investment > > company, said today it may lose as much as $2 billion from > > unauthorized currency bets. Mexico City-based Controladora Comercial > > Mexicana SAB, the country's third-largest supermarket chain, filed for > > bankruptcy last week because of losses linked to the peso's drop. > > `Bad Trades' > > ``The unwinding of these bad trades is causing all types of > > problems,'' Tony Volpon, chief economist at Sao Paulo-based brokerage > > CM Capital Markets, wrote in a note to investors last week. The banks > > that sold the trades also ``hedged themselves,'' exposing them to > > similar funding calls, he wrote. > > The won was Asia's best-performing currency in the four years to Oct. > > 31, 2007, soaring 31 percent to a decade high of 899.60 per dollar. > > That encouraged companies to buy contracts that lock in an exchange > > rate or profit from a drop in dollars. > > South Korea's banks were the main sellers of the contracts. They > > borrowed dollars and converted them to won because they also wanted to > > fix a price for the U.S. currency to limit their exposure. That > > contributed to an almost tripling of the nation's external debt due in > > a year to $176 billion between the end of 2005 and June 30 this year. > > There's a more than 50 percent chance Korean banks won't be able to > > find foreign funding, threatening their ability to repay short-term > > debt, S&P said in an Oct. 15 report. > > Slowing Economies > > Emerging market countries must still contend with a slowing global > > economy. The IMF's World Economic Outlook forecast this month that > > global growth will weaken to 3 percent in 2009, from 3.9 percent this > > year and 5 percent in 2007. That would mean a world recession under > > the fund's definition. > > ``India is still not going to get capital flows when the global > > liquidity conditions begin to ease,'' said Ajay Seth, chief general > > manager of finance at New Delhi-based Maruti Suzuki, which sells its > > Alto small car in Europe. The rupee will fall to 49 per dollar again > > ``very soon,'' he said. > > Slowing exports and rising import costs prompted South Korea's central > > bank to forecast a $9 billion deficit in its current-account this > > year. Brazil is forecasting a $28.8 billion deficit in the broadest > > measure of trade. > > ``There's a funding problem in dollars worldwide,'' said Rajeev De > > Mello, head of Asian bonds in Singapore for Western Asset, which > > manages about $600 billion. > > To contact the reporters on this story: Kim Kyoungwha in Beijing at > > [EMAIL PROTECTED]; Wes Goodman in Singapore at > > [EMAIL PROTECTED] > > Last Updated: October 20, 2008 06:47 EDT- Hide quoted text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. 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