There is a lot talk about intervention/manipulation of the markets as discussed in: Manipulation of the market. Sinister design by the powers at be? Or just stupidities last gasp, it does occur but mostly in the Foreign Exchange markets where central banks/government have direct buy/sell into the market. Not stocks. This FX intervention predominantly occurs out of Asia. This has become in the last 3 months an almost paranoid and bizarre style of intervention. Namely the export countries such as South Korea, Japan, Taiwan and of course China.
China has been fixing various rates above their USD peg please refer to The PBoC are... and The PBoC are....(update 1) has been almost comical. Fixing rate, then buying USD to drop the 'fixed' Yuan rate against the US currency; happens daily. But it is Japan that is out of control with FX intervention, namely the BoJ. Japan is a political basket case, with a central bank that has an ingrained paranoia of YEN appreciation. Why? Their export markets. The same with South Korea, who intervene so often with the WON they (South Korea) might as well do what China did (and is still doing), and just peg the WON to the USD and be done with it, instead they (South Korean government passed legislation banning forward contracts of WON buy/sells please refer to: Amazing Central bank intervention (update 1)
The other comical aspect is the insane buying of the EUR in the last month/s (starting in May 2010); not only have all these countries mentioned carrying huge FX losses on the EUR; they also have huge reserves of USD that have depreciated. So if you buy (feverishly) EUR/USD then your USD reserves take a hit. So it works like this: Japan then sells YEN/USD goes up, South Korea then sells the WON /USD goes up, China then lets the Yuan appreciate the buys USD (thus USD appreciates against Yuan). Then they (countries mentioned) buy EUR and USD crosses (CAD, AUD, REAL etc) in a 'FX trader living in an asylum way'.
This goes on daily and as mentioned in the last 3 mths in a hyper way. The obvious answer to erratic central banks behavior is Asia's planning government/s are losing control of their fledgling export markets/political situations.
In other words Asia's export markets probably are about to collapse. Big time.
*please note revised post :The 2009 'Obama bounce' / liquidity rallies have come to an end. (*revised)
No comments:
Post a Comment