Forex Trading - Exotic Currencies

What is the Canadian Dollar? What influences the Canadian Dollar?

Fri, 10 Oct 2008 03:20:48 -0700

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The Canadian Dollar is the currency of Canada. In foreign exchange trade, it is also termed as "The Loonie". It is issued by the Bank of Canada which is also responsible for making economic and financial policies for the nation. Many central banks around the world keep Canadian Dollars as the reserve currency.

A major decline was observed in Canadian Dollar against US Dollar during the technological boom of the 1990s that was focused on United States. From that time on, it has made a strong place for itself in the international foreign exchange trading markets.

It has risen against all the major currencies, primarily because of the high prices of commodities, which are exported by Canada. Canada also holds one of the major crude oil reserves on the globe. The main costumer of Canada is United States of America. Thus if the oil prices increase, the Canadian Dollar is also strengthened.

In 2007, the Canadian Dollar rose sharply against the US Dollar because of the constant muscle of the Canadian economy and the weakness of the US currency on the world foreign exchange markets. Since most of the export and import businesses of Canada are linked with United States, so the main interest of the Canadians in the value of its currency against US Dollars is understandable.

Although the Canadian Dollar tends to move along US Dollar in the international markets, yet Canadian Dollar is considered to be more stable than its US counterpart. The swift growth in the value of the Canadian Dollar lifts the price of Canadian exports to the United States, which make up a large part of the economy. With the increase in the Canadian Dollar, it becomes easier for the Canadian industries to buy foreign material and businesses.

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Financial Experts Expect the Vietnamese dong to Continue to Drop

Mon, 21 Apr 2008 03:54:03 -0700

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Asia’s worst currency, the Vietnamese dong, will continue to drop as inflation rises. This is the largest drop in the last 10 years say the experts at HSBC. The dong has gone down by .7% this year, and that has voided any of last years gain. Another slow down to this, the world’s worst currency, are high food and oil prices. The increase in these commodities may cause the nations deficit to rise and slow any earnings made by corporate growth.

A foreign exchange strategy expert at HSBC, in Hong Kong, Richard Yetsenga said "We see some near term weakness, and the key concerns are that inflation and excessive domestic growth have been allowed to persist. These economic pressures have caused the dong to go from positive to negative"

Other financial institutions in agreement with HSBC are ABN Amro Bank NV, and Morgan Stanley. Amro says the dong will go lower, and published a report to that effect last week, and Morgan Stanley, who earlier in the year predicted a 4% gain, says that their prediction "may have been too optimistic."

To make matters worse, Goldman Sachs Group Inc. reported that the State Bank of Vietnam purchased a large amount of dollars in March, which again caused the dong to go down by about 1.8%. The purchase was intended to make the nations exports more sought after.

As of yesterday, the dong was at 16,110.5 and may go down another 0.7% by the middle of the year, reaching as low as 16,217 and end the year out not much higher than 16,135, according to HSBC expert Yetsenga.

Economic Growth has also Slowed

Due to slowing global economy, the economic growth slowed during the first quarter to 7.4%. Due to this information and the nation’s inflation rate, Vietnam has stated that it intends on reducing the targeted growth rate to 7% this year.

The depreciation of the dong is caused by several factors, according to the financial experts, and those factors vary, but what is known is that the dong has changed very little since April, when the central bank informed the financial world that it would expand the dongs daily trading band to 2% on either side of a daily fixed rate. The purpose of doing this was to slow the 19.4% inflation rate, but the government did not mention when the State Bank of Vietnam would widen this band.

Philippine Peso rises to an 8 year high

Fri, 29 Feb 2008 23:28:43 -0800

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The Philippine Peso has risen to an 8 year high against the US Dollar in an early trade on Thursday, reflecting the weakness of the US Dollar. concerns. The Bangko Sentral ng Pilipinas (Central Bank of the Philippines) has yet to intervene in the market since Tuesday when it established a 'feeble dollar-buying defense', according to traders at Metropolitan Bank & Trust Co. The rising Philippine Peso alongside other South East Asian currencies have been benefited by the slowing US economy. The Philippine Peso was the strongest Asian currency in the year 2007, but is currently lagging in 2008.

''The market is continuing its consolidation phase. There are bouts of bargain hunting but it is still not as strong as it could have been compared to the other markets that have rallied recently,''said Jose Vistan, research director at AB Capital Securities.

The Philippine Peso's rise comes a day before protesters against President Gloria Macapagal Arroyo stage another street protest to demand her resignation. The Pangulo of the Philippines has again been subject to political controversy where she and and ally have been implicated.

In forex trading, the Philippine Peso has risen to an 8 year high against the US Dollar. The rising Philippine Peso rose to 40.25 per US Dollar in morning trade Thursday, its strongest level since January. It has since hovered around 40.45 Pesos per Dollar. The Philippine Peso's rise has been supported by a strong regional market which have embraced the prospects of further interest rate cuts by the US Federal Reserve in an attempt to avert a recession. This has encouraged traders to invest in the emerging Asian markets which hold high yielding assets.

Asian Currencies rise on rate advantage

Thu, 21 Feb 2008 05:57:00 -0800

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Asian currencies have risen, led by Taiwan's Dollar on speculation that the region's wide interest rate advantage over the US will attract overseas investors. Alongside the Taiwan Dollar, the Indonesian Rupiah, Indian Rupee and the Philippine Peso have risen as asian stock markets climbed on the belief that earnings are able to rise despite the economic recession in the US. Taiwan was the top performer among the rising Asian currencies, hitting its strongest in 21 months.

''It's mainly foreign fund inflows that's lifting the Taiwan dollar,'' said Henry Lin, a currency trader at Shin Kong Commercial Bank in Taipei.

''Taiwan's interest rates are already higher than those in the US, and there's some fund repatriation by local investors.''

In forex trading, The Taiwan dollar gained 0.4 percent to NT$31.521 against the US Dollar this afternoon in Taipei. It rose to NT$31.5 which is its highest level since May 2006. The Rupiah added 0.2 percent to 9,171, while the Philippine peso rose 0.6 percent to 40.580 pesos against the US Dollar. India's rupee gained for the first time in five days, adding 0.5 percent to 39.99 versus the US Dollar.

Taiwan's central bank increased its borrowing rate to 3.375 percent in December, while the US Federal Reserve has reduced borrowing costs to 3 percent. The main driver for the Taiwan dollar is the decline in US interest rates according to Barclays capital. The rising Asian currencies is the same occurence happening with the Australian Dollar. The wider the interest rate differential between two countries, the higher the advantage for the nation with a contractionary response.

NZ Dollar may fall on weak global growth

Sun, 10 Feb 2008 18:24:03 -0800

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The NZ Dollar may fall on weaker global growth, which will also reduce the demand for the currencies of the nations who take advantage of high commodity prices and high yields. Such a country include New Zealand's closest neighbour Australia, whos interest rate has hit a 12-year high of 7 percent after the Reserve Bank of Australia (RBA) raised rates by 25 basis points last month. The Group of 7 (G7) meeting in Tokyo have indicated that further rate cuts and tax reductions will me needed in order to boost the slowing world economy which is already in the midst of a recession. The NZ Dollar may fall on the back of a recession as it may cause a reduction of investment into higher yielding currencies. ''As worries about the health of the global economy escalate, we'd expect high-yielding currencies like the New Zealand dollar to under perform relative to safe haven currencies like the yen,'' said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. New Zealand's interest rate is the second highest in the world among the AAA rated nations. Its economy has already begun to slow down, with the housing market growing at a record slow pace, rising at 8.9 percent in January from a year earlier.

In forex trading, the NZ Dollar may fall later this year amidst a slowing world economy. Currently, it traded at 78.80 US cents compared with a previous trade of 78.85 US cents. Against the Japanese Yen, it traded at 84.53 Yen from 84.60 Yen. Other currencies posting possible long term falls include the Philippine Peso.

Philippine Peso set to fall in 2008

Sun, 10 Feb 2008 01:07:08 -0800

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The Philippine Peso is set to fall in 2008 as it may struggle to retain its current strong position as it faces reduced exports and a drop in its attractive yields. The Philippine peso was Asia's best performing currency in 2007 amidst the strong influx of foreign exchange inflows from Overseas Filipino Workers (OFWs) coming home to their Philippine based families during the Christmas season. It gained ahead against the Asian currencies, with a 19 percent rise against the US Dollar, high yield, cheap stock market and a mild policy towards the Philippine Peso. Despite this, many of those factors have already changed. The central bank cut interest rates by 2.25 percent in the past 12 months and foreign investors have avoided risky markets, plagued by the Subprime mortgage crisis. ''The more uncertain growth environment, higher oil prices and slower remittance growth should mark the pace of the peso gains lower,'' said Yen Ping Ho, a strategist at JPMorgan Chase Bank. The Philippine Peso is set to fall in the midst of a possible recession in the US and growing prices at the bowser.

How about Philippine exports? The bulging Philippine Peso has already been blamed for a sharp reduction of exports during November 2007, effectively widening the trade deficit gap. Combine this with a further reduction in the economic growth of The Philippines' main trading partners Japan and the US. The outlook for the Philippine Peso and its economy looks bleak in the long term.

In terms of yields, the Philippine borrowing rate has already hit a 15-year low of 5.25 percent after the four interest rate cuts in the year 2007. The Philippine central bank is set to follow suit with the unexpectedly large rate cut of 1.25 percent last month by the US Federal Reserve. ''With the borrowing rate at 5.25 percent and biased downward, it will potentially erode the peso's status as a high yielding currency,'' said Christy Tan, a strategist at Bank of America. The Filipino Peso's yields are already heavily disadvantaged compared to Indonesia's 8 percent borrowing rate and India's 6 percent borrowing rate.

The Philippine Peso is set to fall in forex trading, already losing its top position against the Chinese Yuan and the Malaysian Ringgit, despite hitting an 8-year high at 40.5 Philippine Peso per US Dollar on January 15. Other Asia-pacific currencies have had mixed results in forex trading amidst concerns over the weakening US economy. The Philippine Peso traded at 40.65 per US Dollar from 40.50 Peso per Dollar in February 1. The US Dollar was up slightly at 1.4189 Singapore dollars to the Dollar on Friday from 1.4166 the week before. The Japanese Yen traded fell to 107.37 Yen to the US Dollar compared with 106.34 Yen a week earlier. Despite Australia's wide advantage in its yield, it is set to have a range bound week due to concerns on the US. The Australian Dollar is currently hovering in the middle of the 89 US cents mark. Perhaps we will see another brief improvement on the Philippine Peso performance, riding on the backs of homebound Overseas Filipino Workers (OFWs) coming home during the holiday seasons?

Philippine Peso is Asia's best performing currency

Wed, 12 Dec 2007 22:44:25 -0800

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The Philippine Peso reached a 7 1/2 year high against the U.S. Dollar whie the South Korea's Won incurred a sharp decline after US. job data increased the appetite for higher risk investments amidst the Federal Reserve decision to cut interest rates. In the Asian region, every currency appreciated against the US Dollar apart from the Taiwan Dollar and the Korean Won. The US Federal Reserve on Tuesday cut its interest rate by a quarter of a percentage point to 4.25 percent, its third rate cut in an expansionary stance. Investors and traders believe that a cut in interest rates by the Central Bank of the Philippines on December 20 is the only way to curb the rising Peso. Despite the ongoing subprime crisis in the US, the Filipino Peso is said to remain strong due to the strong foreign exchange inflows from Overseas Filipino Workers (OFWs) to their families amidst the approaching Christmas season.

In forex trading, the Philippine Peso strengthened 0.4 percent against the US Dollar today. It hit 41.58 per US Dollar. The Philippine Peso has risen close to a total of 19 percent against the US Dollar this year and is at a high level since hitting 41.28 Pesos on May 10 of 2000.

Brazilian Real on 7-week low on tightened trade surplus

Mon, 26 Nov 2007 15:21:56 -0800

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The Brazilian Real fell to a 7-week low on a tightened trade surplus. Brazilian imports rose to 3.36 billion dollars in the week ended November 5 from 1.99 billion dollars the previous week, Industry and Trade Ministry said in Brasilia today. The trade surplus fell to 139 million dollars from 693 million dollars. The Brazilian Real fell further due to a government initiative to create a 10 billion dollar fund to assist Brazilian companies who want to expand overseas. ''We are seeing much more clearly now the negative impact that the strong real is having on the trade balance because of traditionally higher import volumes at this time of year,'' said Luiz Carlos Barroso Simao, partner and chief strategist in Rio de Janeiro at Mandarim Investimentos.

The Brazilian Real fell for a fourth day in forex trading, declining by 1.1 percent to 1.8232 per dollar in Ney York, its weakest since October 4 on a closing basis. Brazil's currency has weakened 4.7 percent altogether this month, reducing its advance this year to 17 percent.

South Korean Won declines on weaker stocks

Sat, 24 Nov 2007 15:34:04 -0800

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South Korean Won hits its biggest weekly decline in 3 months as investors release holdings of the nations stocks on jitters that the credit market will slow down economic growth. This was shown through stock exchange data which revealed that fund managers sold more of the nation's shares than they bought for 12 consecutive days. ''The won looks to be more vulnerable than some other regional currencies,'' Takashi Yamamoto, chief trader at Mitsubishi UFJ Trust & Banking Corp. in Singapore, said yesterday. ''Investors' risk appetite seems to be declining quite sharply, prompting them to sell emerging-market assets.'' A factor to the decline is also due to the international reluctance to continue high risk trades.

The South Korean Won declined 1.4 percent this week in forex trading to 930.60 per dollar, according to Seoul Money Brokerage Services Ltd. It was the second straight weekly loss. The currency may fall around 942 next week, Yamamoto said.

Brazilian Real gains on international investment

Thu, 14 Dec 2006 04:09:00 -0800

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Brazil's Real gained as international investors took the opportunity to hold local assets with rewarding returns. Investment and sales of Brazilian commodity such as orange juice and steel have assisted the currency in gaining 8.9 percent this year. ''Flows are strong, there are hedge funds betting heavily on the real, and dollars from exporters are also coming in more strongly,'' said Alexandre Vasarhelyi, head of currency trading at ING Bank NV's Brazilian unit in Sao Paulo.

In forex trading the Real gained 0.2 percent to 2.1460 reais to the dollar at 4:30 pm New York time, after most trading had finished in Brazil, from 2.1510 reais per dollar yesterday.

Korean Won rises to 9 year highs against the US. Dollar

Thu, 07 Dec 2006 14:47:55 -0800

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South Korean Won climbs to 9 year highs against the US. Dollar on investors expectations of a slowing US. economy. In forex trading, the Won closed at 913.80 against the US. Dollar which is its highest value since October 2, 1997 when the Won closed at 913.50 won against the US. Dollar. It was the seventh consecutive trading session that the Korean Won rose higher against the US. Dollar. Investors have speculated that the US. Federal Reserve may cut its interest rate at around March next year as US. growth slows.

Earlier, the central bank of South Korea increased its required reserve ratio on foreign currency demand deposits to 7 percent from 5 percent, which will affect lenders capability to expand foreign curreny loans. This increase is seen as the central bank's attempt to slow the Won's steep gains in the foreign exchange.

Asia's currencies remain solid as US. data affect the Dollar

Sun, 29 Oct 2006 22:14:01 -0800

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The Asian currencies were solid against the US. Dollar on Monday after the release of weak economic data strengthen the view the US. interest rates should remain steady for the moment. U.S data revealed that the US. economy grew at an annualized rate of 1.6 percent in the third quarter which is its slowest rate in more than three years due to a falling housing market. This fall led to fresh gains for the Asian currencies in forex and also followed multi week highs in foreign investment inflows.

''Dollar/Asia downside momentum appears apt to follow through today, with the below consensus US GDP print again raising market doubts to future Fed tightening,'' analysts at JPMorgan said in a statement.

In forex trading with the Japanese Yen, it rose one percent from the level it traded on Friday at about 117.50 Yen per Dollar. Forex with the South Korean Won rose to a one month high to 942.60 per Dollar. Forex with the Singapore Dollar hovered at about 1.5580 per Dollar and forex trading with the Philippine Peso gained about one fifth of a percent to 49.73 to the US. Dollar, which is its highest in more than four years.

Asian economies with large foreign currency reserves to invest overseas

Wed, 18 Oct 2006 01:47:41 -0700

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According to the United Nation's trade body, Asian nations with large foreign currency reserves are emerging as a major source of direct foreign investment as they seek markets throughout the world. Investment overseas by companies from China, South Korea, India and other East Asian nations contributed up to $68 billion US. Dollars in 2005 with outflows likely to increase due to flourishing foreign currency reserves, the U.N Conference on Trade and Development said in its World Investment Report which was released on Monday. These large reserves have assisted Asian companies who have been scouting to secure new markets and resources to support the region's economic boom.

The reported cited that the Chinese government is considering to set up an investment fund with a part of its foreign currency reserves which total about $1 trillion US. Dollars, which is the largest in the world. It also said that China may be able to do what Japan did in the 1980's, when Japanese firms used their surplus foreign currency reserves to expand across the world.

A major part of Chinese overseas investment is set on acquiring access to natural resources like oil while the other East Asian countries have focused on expanding in advanced economies through aquisitions.

Singapore poised to take over japan in currency trading

Tue, 29 Aug 2006 03:02:53 -0700

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Singapore is ready to overtake Tokyo Japan, as Asia's largest currency trading centre due to investor demand for new market assets.

``The fastest growing sector of the foreign-exchange market is in emerging Asia, and trading for much of that is based here,'' said Callum Henderson, head of currency strategy in Singapore at Standard Chartered Bank Plc.

The daily amount in Singapore's spot market, transactions to be delivered in two days averaged $65.1 billion in April in comparison to Japan's $66.1 billion. The volume of Chinese Yuan being traded has increased 500 percent from 2001 to 2004 and the Indonesian Rupiah went up 283 percent.

Singapore's favourable location in South East Asia plus the diverse population from China, India, Malaysia and Indonesia supply a workforce that benefits Singapore. They're able to speak english and also their native language ato help do business throughout the region.

``Japan is on the edge of Asia, so you can't cover the other markets that well,'' said Rajeev De Mello, the Singapore-based head of Asia fixed-income investment at Bank Pictet & Cie., which has $28 billion of debt under management. ``Singapore has a talent pool. They have people from everywhere here.''

Singapore's financial regulations are less weighty than Japan's in terms of corporate tax. This tax in Japan is 40.7 percent in comparison to Singapore's 20 percent.

Sri Lankan Reserves Down

Sat, 17 Jun 2006 15:45:21 -0700

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The Central Bank of Sri Lanka spend 100 million dollars, thus causing a fall in official reserves. The Central Bank said that gross official reserves stood at 2.6 billion dollars by end May 2006.

This is close to a loss of 400 million dollars to the 3 billion dollars that officials had reported earlier.

Officials from the Central Bank deny the loss of the 400 million saying its partly due to the way reserves have been reported. An Analysis by Lanka Business Online only showed a loo of 80 to 90 million dollars during May. Official data later showed that the Central Bank had spent 95.9 million through the intervention in the inter bank foreign exchange market.