Forex Reader

It’s good news for the Philippines that the country is growing economically and thus able to keep one step ahead of the debt collectors. With the reputation of being one of the most active debt issuers in Asia and spending most of its annual budget for the repayment of external debt, the country’s central bank announced that its total foreign debt dropped by 3.8 percent to $53.9 billion at the end of June.

The Bangko Sentral ng Pilipinas (BSP) said in a statement on its website that the net payments made by government and private sector borrowers was in excess of $2 billion. These payments were partly compensated by upward forex revaluation adjustments on liabilities denominated in yen and euro, and because of the large number of investments by non-residents in the country’s international debt papers.

It’s an irony that the strong showing of the rupee over the past month is proving to be the reason for the currency failing to appreciate further. With oil importers using the gain in the rupee to buy dollars at a cheaper rate, the gains of the last quarter are due to end.

According to Bloomberg, the rupee gained 0.2 percent during this quarter. A June report that stated that the economy was growing did not do much to further strengthen the currency as India’s largest oil refiner, Indian Oil Corporation, and other importers going on a dollar-buying spree to pay for oil imports.

India meets more than three quarters of its oil needs through foreign shipments. As of August, its crude oil imports increased 12 percent from the statistics registered the previous year. With crude oil rates having risen by over a hundred percent during the past three years, India spent $5.04 billion towards its August oil imports.

India’s central bank announced that the country’s foreign exchange reserves rose by $940 million to reach $166.482 billion as of September 22. The previous week ended September 15 saw the reserves rise by $404 million. The Reserve Bank of India said that foreign currency assets increased by $936 million to touch $159.175 billion on September 22. Business Standard reports:

Foreign currency assets in dollars include the effect of revaluation of non-US currencies such as euro, sterling, and yen held in reserves. Reserve position in the International Monetary Fund increased by $4 million to $768 million.

A slowdown in the economy is not always enough to check inflation, as proved by the appreciation in the dollar. The greenback rose against the euro on Friday even as the U.S. Commerce Department reported that consumer spending adjusted for inflation dropped 0.1 percent in August, the first fall in almost a year. Inflation remained a high 2.5 percent. M Live reports:

Weaker consumer spending could herald a weakening of economic growth, a trend that usually weakens a currency. Central banks use higher interest rates to combat inflation, and the dollar has profited from a series of rate increases in the past two years.

Just days after the State Administration of Foreign Exchange (SAFE) waved away as nonsense news that it was planning to issue a new regulation governing foreign exchange, China’s foreign exchange regulator announced that come November 1, it was increasing the level of supervision of trade-related foreign exchange dealings. The move is meant as a measure to check speculative capital inflows gambling on the appreciation of the yuan.

Accordingly, organizations will be sorted into categories based on their prior foreign exchange transactions, and those that are suspected to have carried out forex dealings under the guise of trade activities will be watched with an eagle eye.

China has recently introduced stricter measures to check the inflow of foreign capital into its real estate sector. With the Asian country already topping the list of international foreign exchange holders, and the forex reserves set to touch the $1 trillion mark by the end of this month, China is also tightening the screws on the repatriation of foreign funds by companies. Firms that wish to do so should provide stronger documentary evidence that inflows will be used for trade activities before banks sanction the repatriation.

China has come under continuous international criticism for failing to let its currency appreciate on par with the rise in its trade surplus. 

The US dollar moved higher against the yen and euro in the afternoon trading in Singapore. Dollar’s rise has been attributed to the focus of the market on the slated release of the US retail sales data for last month. The dollar was at 117.65 yen, up from 117.53 yen in Sydney trading two hours ago. The euro was at 1.2687 USD, down from 1.2693 USD in the Sydney trading. It is significant to note that the US dollar is doing a steady progress over the past couple of weeks.

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The government of India is planning to relax certain regulatory norms such as permitting foreign currency hedging or easier purchase of dollar-based or pound-based health policies within the country. The move would benefit many Indian multinationals.

Experts believe that full convertibility of the rupee is not a necessary pre-condition to set up the Mumbai center, since many other countries set up such centers before making the pound full convertible. A committee consisting of chairpersons and managing directors of several public sector banks has been set up to formulate guidelines on regulatory measures.

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Zimbabwe Republican Police (ZRP) has begun illegally seizing foreign currency from tourists and moneychangers. Their aim is to supply the forex-strapped government with hard currency. The crackdown has raised much outcry in different quarters. According to the government sources, foreign currency is being collected to buy fuel for farm vehicles.

The ZRP reported that about 150 lodges, restaurants and tour facilities have been shutdown because they failed to meet minimum international hotel standards. Government’s raid was part of a broader plan drafted by the National Economic Development Priority Program (NEDPP) to collect money to buy fuel for its military as a precaution against civil unrest.

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Britain has decided to urge the International Monetary Fund to set a timetable to make its new surveillance framework fully operational. British Treasury Minister Ed Balls is slated to talk on the imbalances that pose a risk to the global economy. Top financial policymakers are scheduled to meet this week in Singapore. They will discuss how to boost the IMF’s surveillance of exchange rate policies of emerging economies such as China. The UK officials demand that the IMF’s ministerial body should set an annual surveillance remit, which would become a practical charter for multilateralism. .

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The Union Bank of India (UBI) has decided to introduce facilities for fixing gold and forex rate online. The bank has signed an agreement with Reuters for this purpose. The bank is all set to open two overseas branches and two representative offices abroad this fiscal year. RBI has already given permission to UBI in this regard. However, the UBI is awaiting the clearances of the central banks of the respective countries to open branches there.

The overseas branches will be opened at Doha and Hong Kong. The representative offices will be set up in Dubai and Shanghai. According to the bank sources, it is going to announce the introduction of assured credit of outstation check collection system within a fortnight.

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