foreign reserves

Rising Risks India

By |2018-12-10T18:04:09+00:00December 10th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Banking regulation is never easy. Shifting regimes and tightening things up a bit during a rip-roaring global economy, however, makes it much less stressful. Among global banking systems the one in India has lagged. Much of the rest of the world had moved on to higher capital requirements in addition to (sappy) liquidity constraints long [...]

China’s (not) SAFE

By |2018-11-07T19:19:16+00:00November 7th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In another sign of repeating 2015, the Chinese are beginning to mobilize their “reserves” again. Three years ago, in a futile attempt to staunch CNY’s stubborn “devaluation” various government authorities blew through just about $1 trillion. It didn’t work. You would think that everyone could learn from this episode. I think the Chinese did, which [...]

Brazil Money Math

By |2018-09-19T12:41:14+00:00September 19th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On June 10, 2013, Brazil’s central bank announced an allotment of 40,000 currency swap contracts at auction. This was the second operation carried out in short order that month, following weakness in the real, Brazil’s currency (BRL), against the dollar. In order to forestall any further declines, central bank intervention has long been a frontline [...]

Globally Synchronized Bond Vigilantes

By |2018-04-30T17:25:12+00:00April 30th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One equal part of inflation hysteria had been that as the US economy recovers and growth accelerates, foreign buyers would flee US Treasuries. The bond market would be hit with a double damning of higher inflation and and substantially reduced overseas purchases. Under such pressure, no way could yields hold under 3% for very long. [...]

Some First Principles Of A ‘Dollar Short’

By |2018-04-16T19:25:14+00:00April 16th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On Friday I wrote: Again, the size of your reserves reflects, and is proportional to, your potential need for funding. You can’t accumulate that many unless you have a similarly arrayed “dollar short.” The bigger the stockpile the more potential for it to get out of hand if things go the wrong way (usually on [...]

The Noose Only Tightens

By |2017-05-16T19:19:40+00:00May 16th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Earlier this month, China’s State Administration of Foreign Exchange (SAFE) reported a large increase in official reserve holdings. The biggest “inflows” in several years has, as you would expect, led to much optimistic commentary suggesting if not outright stating that the currency problems are no more. It is not the first time such claims have [...]

Big Difference Mechanical Tightening

By |2017-04-24T18:11:07+00:00April 24th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The mainstream narrative as it relates to Chinese money is “tightening.” Having survived the economic downturn last year, we are to believe that the PBOC is once again on bubble duty. They raised their reverse repo rates, considered to be their policy benchmarks, three times up to mid-March. The central bank also increased the rate [...]

That Escalated Quickly (In Rumors)

By |2017-03-02T17:55:03+00:00March 2nd, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I honestly don’t know how much clearer it could possibly get. The mainstream continues to struggle to identify the causes of the “rising dollar” when in all cases it is decidedly simple. The more the dollar goes up, the more whatever counterparty country is paying for those dollars. The entire world is in a synthetic [...]