Dollar Falls, Set for Weekly Loss Against Euro, on Yield Demand

 

The dollar fell, heading for its biggest weekly loss against the euro in a month, as Asian stocks rose for a third day and on speculation the Federal Reserve will keep interest rates low.

The dollar weakened against 11 of the 16 most-traded currencies as Dallas Fed President Richard Fisher may elaborate on the central bank’s statement this week that the benchmark rate will stay at “exceptionally low levels” for an extended period. Japan’s currency slid for a fourth day against the Australian dollar as commodity prices gained, spurring demand for the South Pacific nation’s assets. New Zealand’s dollar fell after the government said its economy shrank at a faster pace.

“Gains in stocks are pumping capital into markets,” said Masaki Fukui, a senior market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender by assets. “The recent risk aversion strengthened the dollar as a refuge, but as risk appetite rebounds, higher- yielding currencies seem to be benefiting.”

The dollar declined to $1.4043 per euro as of 12:30 p.m. in Tokyo from $1.3988 yesterday in New York, extending its loss this week to 0.8 percent. The yen fell to 134.66 per euro from 134.22. The U.S. currency traded at 95.89 yen from 95.95 yen.

Australia’s dollar rose 0.5 percent to 80.61 U.S. cents, and climbed 0.4 percent to 77.30 yen. Against the dollar, the pound advanced 0.4 percent to $1.6437.

Indonesia’s rupiah led Asian currencies higher against the greenback, strengthening 1.2 percent to 10,155 per dollar, as regional equities gained. The Nikkei 225 Stock Average rose 0.2 percent, climbing a third day, and the MSCI Asia-Pacific Index of regional shares advanced 0.9 percent.

Commodity Prices Gain

Gold gained for a fourth day, adding 0.3 percent, and crude oil rose 0.3 percent. Gold is Australia’s third-most valuable raw material export, and crude oil is its fourth.

“We had a strong performance in commodity prices,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney. “Equities also performed very well, which is very supportive of investors’ sentiment generally” to seek higher- yielding currencies.

Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3 percent in Australia, making the South Pacific nation’s assets more attractive.

The U.S. central bank held the target rate for overnight lending between banks in a range of zero to 0.25 percent for a fourth consecutive meeting on June 24. The Fed’s Fisher will speak at noon in Dallas.

Summer Bonuses

The yen headed for a weekly decline against the euro as signs the global recession is waning increased speculation that Japanese employees will use their summer bonuses to buy higher- yielding assets abroad.

Finance companies in Japan are looking to raise 520 billion yen ($5.4 billion) for mutual funds focused on foreign assets this week, according to data compiled by Bloomberg.

“Risk-taking appetite among investors is improving,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-biggest bank. “The bias is to sell the yen.”

Large companies in Japan will pay this month an average of 754,009 yen in summer bonuses, according to data from the Japan Business Federation. Japanese firms pay bonuses twice a year.

The Ministry of Finance in Tokyo reported yesterday Japanese investors bought 336.1 billion yen more in foreign bonds, stocks and short-term securities than they sold in the week ended June 20.

The yen lost 0.4 percent against the euro this week, extending its loss this quarter to 2.7 percent.

New Zealand’s dollar weakened 0.2 percent to 64.41 U.S. cents after the statistics bureau said gross domestic product declined 1 percent in the first quarter. That exceeded the median estimate for a 0.7 percent contraction in a Bloomberg News survey of 11 economists.

“This is the fifth negative quarter and the second quarter is also on track for a drop so the green shoots in the New Zealand economy are fragile,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Data like this does support Reserve Bank of New Zealand Governor Alan Bollard’s warning that benchmark rates may still come down and will remain low for some time.”

-Bloomberg-

 

Dollar’s Reserve Status May Deteriorate, Roubini Says

The dollar’s status as the world economy’s sole reserve currency may deteriorate, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

“We may see complementary reserve currencies,” Roubini said at a conference today in Athens. While it’s “not going to happen overnight,” the development “will diminish the role of the dollar over time.”

The dollar’s status has come into question as leaders of Brazil, Russia, India and China discuss substituting other assets for their dollar holdings amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing. China alone owns about $744 billion of U.S. Treasury bonds among its $2 trillion of foreign-exchange reserves.

Russian President Dmitry Medvedev last week renewed his call for consideration of a supranational currency to challenge the dollar. Chinese Central Bank Governor Zhou Xiaochuan said in March that the International Monetary Fund should create a “super-sovereign reserve currency.”

For the U.S., a change in the role of the dollar would risk increasing its financing costs and undermining its preeminent place in the world economy. The yield on the 10-year Treasury bond jumped to 3.9 percent this week from a low of 2.2 percent in January.

The dollar today weakened against the euro, falling 0.3 percent to $1.4019 per euro as of 10:37 a.m. in London. The currency has dropped 10 percent against the euro in the past three years.

Reassurance

Treasury Secretary Timothy Geithner sought to reassure investors last week during a trip to China, saying June 2 that Chinese officials expressed “justifiable confidence in the strength and resilience and dynamism of the American economy.” Demand for record sales of U.S. debt will be sufficient to meet supply, he said.

The U.S. and China will hold economic talks in Washington in the week starting July 27. Premier Wen Jiabao in March called for the U.S. “to guarantee the safety of China’s assets.”

Roubini, 51, also said today that the U.S. can’t count on a strong economic recovery to restore its finances. The world economy will remain weak for the next two years, he said, predicting growth of 1 percent in the U.S. in 2010 and stagnation in Japan and Europe.

Weakness

“Recovery will be weak, anemic, subpar,” he said. Optimists are “getting ahead of the curve” and “advanced economies are going to grow at a very slow rate” after the recession is over, he added.

Larger emerging economies such as Russia and Brazil are also seeking more clout in the international financial system by pouring their reserves into IMF bonds, economists say.

Russia and Brazil have announced plans to buy $20 billion of bonds from the IMF and diversify foreign-currency reserves. China will purchase $50 billion and India may announce similar funding, Brazil’s Finance Minister Guido Mantega said.

Even so, those countries may struggle to elbow aside the dollar as long as they keep buying U.S. paper to hold down their own exchange rates and maintain trade surpluses.

The so-called BRICs countries increased foreign exchange reserves by $60 billion in May and accumulated dollars at the fastest pace since before the credit markets froze last September.

 

-Bloomberg-

 

Gekko: Its time to used gold dinar.

FOREX 101

One@Muzakarah

Pemuda UMNO mencadangkan muzakarah UMNO-PAS dimulakan semula memandangkan proses pemilihan pucuk pimpinan pusat bagi kedua-dua parti tersebut telah pun selesai. Bagi Pemuda UMNO, inilah ruang dan peluang terbaik bagi kedua-dua parti terbesar di Malaysia ini untuk duduk semeja berbincang – bukan hanya demi perpaduan Melayu dan ummah namun berdasarkan nawaitu atau niat bagi agenda nasional yang mencakupi kepentingan semua. 

Muzakarah seumpama ini menuntut kematangan dan pemikiran jauh semua pihak. Sehubungan dengan itu, UMNO-PAS perlulah mengenepikan sebarang persoalan dan pergolakan politik dan seterusnya mengambil pendekatan husnul dzon (bersangka baik) bagi mencari titik permuafakatan untuk masa depan negara. UMNO-PAS haruslah juga mengelak dari terjerumus kepada polemik syak wasangka atau pencarian kepada siapa yang lebih atau kurang Islam atau Melayunya.

Dari itu, perlu saya tekankan di sini bahawa UMNO tidak pun mengutamakan atau terlampau mengharapkan Kerajaan Perpaduan hasil muzakarah yang dijalankan. Maka, PAS tidaklah perlu khuatir akan keikhlasan UMNO – yang paling penting sekali adalah untuk kedua-dua parti mencari titik persamaan mengenai isu-isu nasional seperti ekonomi, pembangunan dan kebajikan rakyat. Persefahaman berkisar isu sebegini insya-Allah mampu menonjolkan elemen kesederhanaan dan progresif, lantas wajar disambut seluruh warga Malaysia. Sekiranya ini membawa kepada agenda yang lebih konkrit pada masa hadapan, biarlah kedua-dua pihak berunding pada masa kelak. Pada masa dan ketika ini, apa salahnya jika dibuka pintu dialog sepertimana yang diseru oleh Presiden PAS sendiri Datuk Seri Haji Hadi dan juga Timbalannya Nasharudin Mat Isa.

Justeru, demi kebaikan semua pihak, Pemuda UMNO berharap pemimpin kedua-dua parti bersetuju untuk bersemuka dan bermuzakarah.

 www.rembau.net

 

Gekko: Tak ada salahnya kalau nak berbincang dan bermuzakarah bagi kepentingan rakyat.

Boneka Nurrul

Saya tertarik dengan gambar boneka Nurul Izzah ini. Megapa perlu ada boneka sebegitu? Adakah bagi para peminat mengambil gambar atau beliau seorang artis yang mengejar populariti?

 Wanita melayu Islam tidak harus di bonekakan sebegini rupa.  

Seorang pemimpin itu tidak seharusnya dipuja sebegini rupa… mana keISLAMANnya? Nurrul, jangan jadi boneka. 

 

Gekko: Memang tak berkenan dengan cara begini. Melayu digunakan oleh orang yang tak berguna.