Indonesia can best defend rupiah by staying calm 6 Sep 2018 An emerging markets rout has pushed the rupiah to its weakest since the 1998 Asian crisis. Policymakers, who have until now been laudably proactive, appear rattled. But threats against speculators are less helpful than higher interest rates and reforms that encourage investment.
Hadas: The paradox of risk-free finance 5 Sep 2018 A new study claims that national deposit insurance makes financial crises more likely. It may exaggerate, but guarantees are a sign of a basic problem in banking. The mix of public service and private risk is always potentially toxic. Separation would be hard but worthwhile.
Europe’s next bank cop faces fight on many fronts 3 Sep 2018 Daniele Nouy steps down as chair of the European Central Bank’s banking watchdog this year. Her successor will have to keep cleaning up bad debts and improving money-laundering controls. The bigger challenge, though, is addressing lenders’ chronic lack of profitability.
Britain is making a mess of replacing Mark Carney 3 Sep 2018 The Bank of England boss may extend his term for a second time, keeping him at the central bank beyond June 2019. That could offer comfort to investors worried about Brexit. But it would suggest the government is struggling to find a good successor. That’s a bad signal to send.
Nigerian problems cast doubt over MTN payout 30 Aug 2018 The country’s central bank says the mobile phone group’s local unit illegally paid $8.1 bln to its South African parent. Though MTN denies wrongdoing, its shares are down more than a fifth. Blocked payments from its most lucrative market would threaten MTN’s punchy dividend plan.
As Trump goes low, Fed goes high 24 Aug 2018 Jerome Powell sees little risk of economic overheating, indicating the Fed will raise rates again next month. The U.S. central bank chief’s first public comments since the U.S. president said he wasn’t thrilled with Powell’s policies suggest he’s largely impervious to Trump.
Fed vice chair deserves to be top global bank cop 23 Aug 2018 Allies of President Donald Trump have slammed the Financial Stability Board, but Randal Quarles is a strong supporter. Putting the U.S. central banker in charge of the body that oversees financial regulation when Mark Carney steps down would help maintain global rules.
Italy’s bond fix idea resembles covert bailout 21 Aug 2018 The economic spokesman of the ruling League Party says the euro will collapse unless the European Central Bank limits the gap between euro zone countries’ bond yields to 150 basis points. That bar is too low and would give big spenders free rein to dodge hard budget decisions.
Viewsroom: Turkey’s financial crisis may spread 16 Aug 2018 The feud between President Tayyip Erdogan and U.S. President Donald Trump over steel tariffs threatens to turn other emerging markets cold. Breakingviews columnists discuss the global impact of Turkey’s currency meltdown. Plus: A bad bank in China gets whacked by political risk.
Cox: When commemorating crises, think 20 not 10 15 Aug 2018 As the decennial anniversary of Lehman’s systemic collapse approaches, it’s worth recalling the one that preceded it. Russia’s 1998 default led to LTCM’s demise. Shockingly, that fiasco’s lessons went mostly unheeded until 2008. The key takeaway: there are always blind spots.
Sterling looks ripe for a short sharp bounce 9 Aug 2018 The pound is at its lowest in nearly a year against the dollar and the euro, and options prices show extreme pessimism about its outlook. Investors have grown too gloomy too soon about the risk of a messy Brexit. Even a glimmer of hope of a better outcome will spark a snapback.
Sterling’s Brexit jitters bigger than they look 7 Aug 2018 The pound’s gyrations in the coming year will be fairly restrained, options prices imply. But the currency is expected to be jumpier than a basket of major exchange rates, rather than less volatile as in pre-EU vote days. That gap is a sort of Brexit risk premium, and will grow.
Erdogan opens Turkish lira to new line of attack 6 Aug 2018 The currency hit a record low against the dollar after the United States said it was reviewing Turkey’s duty-free access to its markets. President Tayyip Erdogan has alienated investors. The tougher he talks to the world’s largest economy, the more they’ll punish Turkish assets.
Mark Carney raises rates from position of weakness 2 Aug 2018 The Bank of England governor nudged up borrowing costs even though growth is tepid and will suffer if Brexit goes badly. The economy’s speed limit has declined since the financial crisis and EU talks will take time to pan out. He had little choice, but may have to reverse course.
India central bank doubles down on inflation fight 1 Aug 2018 The Reserve Bank of India raised rates by a quarter of a percentage point even though manufacturing activity slowed in July. The hike may hamper economic growth but removes doubts about policymakers’ commitment to a relatively new inflation mandate. The trade-off is worthwhile.
Bank of Japan tries cheap way of imposing will 31 Jul 2018 Governor Haruhiko Kuroda has pledged to keep rates very low for an extended period to calm investors’ concern that monetary policy may become less loose. The no-cost tactic to keep bond yields in check is born of necessity given how many assets the central bank is already buying.
EU bank fees stuck between politics and regulation 30 Jul 2018 Faced with ultra-low interest rates, the European Central Bank has urged banks to hike non-interest income, which accounts for 30 percent of revenue. Meanwhile French authorities are warning lenders about overcharging clients. The profitability squeeze shows no sign of ending.
Turkey misses easy chance to win credibility 24 Jul 2018 The lira slumped after the central bank left interest rates unchanged. With inflation at 14-year highs, there was every reason to tighten policy. Inaction will only reinforce investors’ concern that President Tayyip Erdogan’s distaste for higher rates is exerting undue influence.
Bank of Japan’s trial balloon shot down on runway 23 Jul 2018 Bond yields and the yen rose after Reuters reported the central bank was debating whether to scale back monetary stimulus. The move would be good for bank investors. But the scale of the market reaction and economic reality will make it hard for Governor Haruhiko Kuroda to act.
Powell is ideal Fed chief for Trumpian times 20 Jul 2018 The U.S. president’s criticism of interest-rate hikes is a challenge to the Federal Reserve’s independence - but it shouldn’t trouble investors. Chair Jerome Powell is politically savvy and has earned bipartisan praise. Not being an econo-wonk like his predecessor probably helps.