Currency


euro dollar

Markets celebrated throughout the world last week when the European Central Bank decided to follow the lead of the US and the UK by printing money by the bucketload.

The euro, since it has existed, has been a strong and reliable currency. This isn’t because of the underlying governments, which are as bad as governments anywhere. Nor is it because the economies have been strong or weak. It’s because the Germany’s influence on the ECB prevented it doing anything idiotic, such as printing money, buying sovereign junk debt, or keeping interest rates at absurdly low levels.

As a result, the US dollar fell from 1.07 euro at the start of Bush Jr’s term to 0.77 at the end. The result: a 28% decline in the value of the US dollar. It would have been over 40% if the financial crisis hadn’t been engineered.

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euro

Since it was formed 10 years ago, Euro has become a solid currency. However, things are going on the opposite way in the last few weeks. It start with Greece where their budget deficit reach more than 12%.

The problem seem to be cantagion to PIIGS country (Portugal, Italy, Ireland, Greece and Spain). Germany, European Union strongest economy seem not willing to help out what they see as a bunch of Mediterranean layabouts.

New York-based investment bank Morgan Stanley is among those saying the possibility of a euro collapse has to be considered. So, if the euro might not be around in 2020, here are seven trades to start thinking about.

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forex

Foreign exchange reserves are the foreign currency deposits that held by central banks and monetary authorities. In Malaysia it is also known as International Reserves. It comprices of Foreign Currency, IMF Reserve Position, SDRs, Gold and Other Reserve Assets.

As of 29th January 2010, International Reserves for Malaysia is at USD97 billion (MYR332.2) and Malaysia is at 16th position when compare with other nation. International Reserves data are released by Bank Negara Malaysia twice a month.

Below are the chart for Malaysian International Reserves since end of 1999. The chart will be updated regularly. You may bookmark this page instead of this post for easy access.

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Bank Negara Malaysia recently warned the public not to participate in illegal investment or training programme on forex or foreign currency trading. All such programmes that offered by individuals or companies both domestic and foreign are included.

Members of the public are usually enticed to attend such investment or training programmes which promises a quick and good returns.

The modus operandi of such programmes includes offering free training, seminars or workshops to lure investors. During the session, investors asked to set-up an online foreign currency trading account with their parent company which they claim having a valid licence to trade foreign currency overseas.

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forex

The rich oil exporters country, Saudi Arabia, Kuwait, Bahrain and Qatar, have agreed to launch a single currency which hope hope to displace the US Dollar as the pricing currency for oil. The four nations will launch the first phase next year by creating Gulf Monetary Council that will pave the way for a full-fledged regional central bank. The decision to launch the Council next year comes at a time when the dollar is struggling with its stature as the world’s currency.

The single currency dubbed ‘Gulfo’, inspired by Europe’s monetary union and widely regarded as a success across the Gulf states. With the introduction of single currency, it is expected to increase trade volume and financial integration, facilitate foreign direct investment, and create the right conditions for the development of the Gulf region into an optimum currency area.

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