Currency Turbulence Remains Very Prevalent

ARGENTINA: the peso is in trouble. The black market rate now sliding through 10 pesos to the USD this week, the official rate is 5.2. Inflation is high, public policy is interfering the market, business confidence is suffering coupled with currency controls.

VENEZUELA: the Chavez regime recently re-elected under a new leader on the slimmest of margins is up against the wall on the economy. The country is on the verge of a significant political crisis.
High inflation is resulting in a bolivar currency that is steadily declining in value. Paper currencies and devaluations are a time tested story that is frequently repeated in Latin American history. Venezuela like Argentina is suffering from ill advised public policy decisions.

JAPAN: the yen breached the 100 JPY to the USD level for the first time in four years this week. Several analysts are now targeting 125 JPY as the next level of decline. The yen is in decline due too  massive government fiscal stimulus and an aggressive central bank policy aimed at depreciating the yen in hopes of stimulating inflation. The country has been fighting deflation forces for 20 years with stagnant growth. The challenge now are many which include massive increasing national debt as a percentage of GDP upwards of 500% by some measures. A declining & aging population coupled with a strict rigid immigration policy. Japan is slowly turning the switch back on for nuclear energy after the devastating earthquake & tsunami from a couple of years ago which essentially shut the domestic nuclear power industry offline. This removal of nuclear energy has resulted in a sharp increase in liquefied natural gas (LNG) imports which is impacting Japan's current account. Expect more yen depreciation ahead. One idea the Japanese authorities may wish to investigate is to re-denominate the yen valuation from 100 JPY to 1 JPY in relation to the USD. This may help to boost domestic consumption as citizens rush to replace mattress old JPY with new JPY banknotes.

BITCOIN: the new virtual currency that has hopes of replacing paper currency whilst minimizing transaction costs for payment settlements. Now there is talk of U.S. authorities interfering with regulation - quite ironic since the currency was designed to avoid central government control.

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