Stablecoin crash drags crypto ideals back to earth 11 May 2022 TerraUSD, a digital token supposedly pegged to the U.S. dollar, slumped to a fraction of that. The popular store of value is vulnerable because its design is based on trading incentives, not hard reserves. For crypto fans there’s a tradeoff between decentralisation and stability.
Zimbabwe borrows from bank of bad ideas, again 10 May 2022 With inflation at 96%, Harare plans to stop further currency slumps by a ban on bank lending. That stymies a sly trade where insiders play the spread between official and black-market FX rates. But as with prior moves it’s a blunt tool that erodes rather than builds confidence.
Stars align for UAE to become a global crypto hub 6 May 2022 Big exchanges Binance, FTX and Kraken are expanding in Dubai and Abu Dhabi as local regulators grant licences to trade virtual assets. The world’s leading financial regulators have been wary of cryptocurrencies. A variety of factors give UAE the chance to steal a march on them.
European banks mount fragile trading fightback 5 May 2022 The markets divisions of Deutsche Bank, BNP and Barclays are outpacing U.S. rivals, reversing a decade of plunging market share. Yet sustaining that growth will be hard, and shareholders clearly dislike the business. It may be a blip on a long-term trend of American dominance.
Russia plays the fool in its own default theatre 3 May 2022 Moscow looks set to meet foreign currency bond payments, after saying a month ago it could only pay in roubles. High oil and gas prices mean it has ample revenue to meet its obligations. But the debt grandstanding may not yet be over, notably if the EU imposes an energy embargo.
Bitcoin’s African outpost raises several red flags 2 May 2022 War-torn Central African Republic is following El Salvador in adopting the crypto unit as legal tender. The surprise of the region’s central bank and Bangui’s use of sanctioned Russian mercenaries are warning signs. Bitcoin’s quest for mainstream acceptance just got harder.
Dollar is worst reserve choice except for the rest 27 Apr 2022 Sanctions on Russia raise questions about the U.S. currency's reliability for foreign governments. But options like the euro are also tied to restrictions. And the Chinese yuan lacks convertibility, rule of law and safe-haven appeal. Reports of the dollar's demise are premature.
Capital Calls: Britain’s beefed-up M&A watchdog 25 Apr 2022 Concise views on global finance: The activist building its stake in video-ratings firm Nielsen may face a potential snag, thanks to the UK’s answer to U.S. cross-border merger cop CFIUS.
Rouble’s strength is sign of Russia’s weakness 6 Apr 2022 The Russian currency has appreciated 70% against the dollar since early March. Capital controls, 20% interest rates, and forced conversion of export revenues have been enough to push it up in very thin trading volumes. The rebound is a sign of economic woes, not resilience.
EU’s Ukraine currency fix is a problem best shared 29 Mar 2022 The ECB wants the European Union to guarantee potential losses when Ukrainians fleeing the war change their currency into euros. A rival plan would leave this up to national governments. The pooled scheme is much more likely to give Ukrainians hope in the value of the hryvnia.
Bank of Japan stumbles into defensive minefield 29 Mar 2022 War, Covid-19 and an aggressive-looking Fed are conspiring against Governor Kuroda’s ultra-loose policy. The yen is plunging and government bond yields are up despite BOJ efforts. There’s no easy solution, but doing nothing is risky too.
Russia’s gold reserves buy Putin a few options 28 Mar 2022 The Russian leader has a $140 bln stash of the yellow metal. Using it, however, can require shell companies and middlemen. Putin’s regime may have some experience helping Venezuela turn bullion into euros. Though U.S. prosecutors will give chase, the gold trail is hard to follow.
Aramco health adds spice to Saudi’s yuan dilemma 21 Mar 2022 Riyadh’s $2.3 trln oil giant is looking to hike output. If the kingdom starts to price some crude sales in yuan instead of dollars, higher Chinese exports could increase its stocks of renminbi. That could focus Saudi minds on whether to hitch its future to Beijing or Washington.
Russia kicks default drama into future 17 Mar 2022 Moscow says it sent $117 mln due in bond interest payments. While sanctions made the decision painful, not paying its dues or offering roubles instead of dollars would have meant years of legal disputes and made the economy even more dependent on oil. That may still happen.
Bitcoin’s true colours shine in stampede to safety 23 Feb 2022 The cryptocurrency fell 5% as conflict in Ukraine flared, undermining the case for it to be a gold-like refuge. Even earlier, it moved too closely in synch with equities to be much use as a hedge. It comes into its own, however, as an amplifier of ups and downs in riskier assets.
Turkey’s lira prop-up plan is dangerous 21 Dec 2021 President Tayyip Erdogan is guaranteeing deposits against local currency drops. It’s tacit admission Turkey’s banks aren’t immune to fallout from his odd views on inflation and interest rates. Details are fuzzy but putting taxpayers on the hook for the lira is asking for trouble.
Switzerland has rich-world foreign reserve problem 15 Dec 2021 After years of intervening to curb franc strength, the central bank has amassed $1 trillion in foreign currency investments. A group of academics suggests converting this into a sovereign wealth fund but that would bring its own worries. Wisely investing so much money isn’t easy.
Capital Calls: Volkswagen, Turkey 1 Dec 2021 Concise views on global finance: The German carmaker may take mining stakes to secure electric-vehicle raw materials, echoing Henry Ford, the U.S. production-line pioneer; the Turkish central bank is resorting to old tricks to prop up the lira but it’s an unsustainable strategy.
Capital Calls: Wise, Swedish oil 30 Nov 2021 Concise views on global finance: The 8 bln pound money-changer raised its revenue targets; $10 bln Swedish oil company Lundin Energy may be considering M&A options.
BBVA’s Turkey M&A logic beats currency chaos 24 Nov 2021 Just before the lira’s plunge, the Spanish bank offered to buy the 50% it doesn’t own of local lender Garanti. The crisis will push up bad debt and squeeze lending margins. But the target’s low valuation and the inefficiency of only owning half give BBVA reason enough to proceed.