Foreign Exchange
Czech central bank starts targeting exchange rate
Czech National Bank finally says it will start intervening in the forex market, a year after it cut rates to the zero lower bound; Czech koruna almost hits target level straight after announcement
Hungary signs RMB swap line with PBoC
Agreement is the People's Bank of China's second with an EU member state following deal with the UK; equals the size of swap line China has with its neighbour Mongolia
FX now a $5.3 trillion per day market, says BIS
The latest BIS triennial survey shows the UK has strengthened its grip on the FX market, while USD/JPY has seen a strong increase in trading activity
FX clearing driven by capital and collateral costs rather than mandate
As mandatory NDF clearing has been delayed, the likely increase in capital and collateral requirements for FX trades is forcing some to consider clearing ahead of the mandate
Israeli committee split over rate cut, minutes reveal
Governor Stanley Fischer used casting vote to keep May rate cut to 25bp after half the monetary committee called for a sharper reaction to tackle the appreciating shekel
Israel cuts rates and buys forex in moves to ward off ‘Dutch disease'
Unscheduled monetary policy decision by Bank of Israel cuts base rate 25bp as central bank launches a forex purchase programme to hold the shekel down after gas finds
HKMA deputy looks to eurodollar model for offshore RMB development
Eddie Yue says offshore RMB market is facing ‘historic transition'; calls for more offshore intermediation and ‘continued relaxation' of RMB flows in and out of China
Emerging markets exports most sensitive to FX changes, says French paper
Banque de France researchers find exports in emerging markets are relatively sensitive to exchange rate changes, while US imports are relatively impervious
Fijian governor hails launch of renminbi currency exchange
Barry Whiteside says currency exchange will boost trade between Fiji and China, which has recently dislodged Japan to become Fiji's fifth largest trading partner
Basel Committee seeks to eliminate principal risk from FX trades
New guidance encourages banks to use payment-versus-payment systems to smooth the settlement of foreign exchange transactions
SNB’s Jordan describes task of maintaining franc exchange limit
Thomas Jordan sets out how the Swiss National Bank has been fighting to keep the franc-to-euro exchange limit in place; explains slight slip-up last week allowing some trades to happen at lower rate
BOJ discusses dollar funding costs through forex swaps
Bank of Japan examines US-implied swap rates amid growing concern over European banks' funding
Asia to develop emergency financial stability safety net
Charles Adams and Lei Lei Song chart the development of the Chiang Mai Initiative Multilateralization and explain three ways to develop Asia’s liquidity support mechanism
Could the Swiss start a trend?
Robert Pringle discusses the Swiss National Bank's action to limit the exchange rate between the franc and the euro, and asks if others should, and will, follow
Taiwan denies controlling exchange rates
Central bank issues “clarification” of the “managed floating exchange rate regime” in place in Taiwan
Philly Fed paper investigates relationship between oil prices and exchange rates
Working paper shows little systematic relation between oil prices and the Canadian-US dollar exchange rate
Questions raised over UK’s FX volume surge
Market participants attribute a range of factors to the 23% rise in FX turnover in the UK reported by the Bank of England's FX Joint Standing Committee on July 25
The folly of foreign exchange intervention
The G-7’s bid to stem the yen’s appreciation threatens to damage Japan’s economy, Geoffrey Wood believes
G-7 pledges intervention to stem yen appreciation
Finance ministers and central bank governors say they will cooperate to counter volatility of Japanese currency in aftermath of Tohoku earthquake
CLS welcomes new Basel working group on FX settlement risk
Work between central banks and supervisors that was halted at the onset of the financial crisis is now set to continue
FX market going global: BIS
Bank for International Settlements’ triennial survey of foreign exchange markets shows decline in prevalence of local transactions, dollar and sterling
IMF explains peso appreciation in the 90’s
IMF paper shows that gains in total factor productivity and more competitive pricing for tradable goods explains the historical appreciation of the peso
IMF highlights risks of FX swaps
IMF paper finds that the use of foreign exchange (FX) swaps for funding and hedging purposes is not as infallible as previously thought, especially in periods of market stress