At our main web site of BankINTRODUCTIONS.com, the theme of our site is mitigating currency risk. Let's take a quick look at some examples of deposit interest rates.
United States USD zero to 1.05% range
Canada CAD 0.15 to 2.3%
United Kingdom GBP up to 2.5%
Turkey lira 10%
India rupee 4.5 to 7% (7 days to 10 year term)
Singapore SGD 0.1 to 1.45% (12 month deposit)
Hong Kong HK 0 to 0.2%
Yuan deposit 3.8% for 12 month term
Switzerland CHF zero
EUR deposit zero
In Switzerland, a handful of private banks charge negative interest rates. That is, the customer pays the bank to hold their monies unlike positive interest rate framework whereby the customer would earn deposit interest. Negative rates are usually found on large deposits such as 100,000 CHF or
1 million CHF for example. Negative rates vary from - 0.125% to - 1%. The thinking here is that negative rates will force the customer to move monies over to the private banks wealth asset management services where the bank earns management fees and can help promote some of their own financial products. Negative interest rates have helped to fuel large demand for safety boxes and personal safes for individuals to store cash and avoid paying interest to a financial institution.
The above examples of deposit rates clearly show the importance of selecting the correct currencies to help mitigate currency risk as interest earned on deposit is very minimal in many industrialized first world economies.
For more information, please contact BankINTRODUCTIONS.com
Sunday, April 8, 2018
Sunday, March 26, 2017
Financialization of Economies in New Zealand, Australia, Canada
Three currencies on our radar screen include the Kiwi (New Zealand dollar), the Australian & Canadian dollar that may be vulnerable to a sharp price valuation correction if some of their real estate markets such as Sydney, Auckland, Vancouver & Toronto stall or commence a significant price correction. Some reports already have Vancouver declining in Canadian dollar prices. In Auckland, 55 percent of the homes are now valued at or over 1 million NZD. Within the city of Vancouver at peak pricing, almost every detached house was valued at or over 1 million CAD.
Their respective Central Bankers leaders over the last few years have implemented close to zero rate interest rate monetary policies in these three amigo countries coupled with a big FOR SALE sign open door policy to foreign investors targeting both their residential & commercial estate. Massive global capital inflows ensued, a large amount from Mainland China have boosted primarily residential real estate values in all these markets mentioned thus decoupling the market valuation from traditional income earned from the local economy.
In due course, real estate has become of the largest components of their respective economies employing many in construction, sales, finance, legal, architects, etc. History has shown several times that massive mortgage financing stimulus creating unsustainable false wealth for a short period of time does not end well most of the time. These economies have become 'Financialized' whereby taxes and artificial short term income and capital gain wealth has kept several governments budgets flushed with cash flows derived primarily from surplus domestic real estate taxation revenues.
The United States in years 2008-09 provides a clear example of the damage that can be done when a gas bag real estate market deflates. Spain during this time entered a depression with 20 percent PLUS unemployment. It has now taken Spain 10 years to recover economically from their experiment with a huge bubbly domestic real estate market..
China has recently implemented further capital controls to try and restrict capital outflows from its citizens in order to help protect and stabilize their national foreign exchange reserve position. Once the flow of foreign capital recedes or completely fades, it is impossible for Canada, New Zealand and Australia to rely on the local economy wealth production in income earned from the local economy to support the current inflated price level.
The most likely scenario is for their respective governments is to keep interest rates low, try and increase their domestic inflation rates while further depreciating their currencies to help mitigate the 'Financialization' damage that is likely to arise.
We remain cautious on these three amigo currencies.
For further information, please visit BankIntroductions.com
Their respective Central Bankers leaders over the last few years have implemented close to zero rate interest rate monetary policies in these three amigo countries coupled with a big FOR SALE sign open door policy to foreign investors targeting both their residential & commercial estate. Massive global capital inflows ensued, a large amount from Mainland China have boosted primarily residential real estate values in all these markets mentioned thus decoupling the market valuation from traditional income earned from the local economy.
In due course, real estate has become of the largest components of their respective economies employing many in construction, sales, finance, legal, architects, etc. History has shown several times that massive mortgage financing stimulus creating unsustainable false wealth for a short period of time does not end well most of the time. These economies have become 'Financialized' whereby taxes and artificial short term income and capital gain wealth has kept several governments budgets flushed with cash flows derived primarily from surplus domestic real estate taxation revenues.
The United States in years 2008-09 provides a clear example of the damage that can be done when a gas bag real estate market deflates. Spain during this time entered a depression with 20 percent PLUS unemployment. It has now taken Spain 10 years to recover economically from their experiment with a huge bubbly domestic real estate market..
China has recently implemented further capital controls to try and restrict capital outflows from its citizens in order to help protect and stabilize their national foreign exchange reserve position. Once the flow of foreign capital recedes or completely fades, it is impossible for Canada, New Zealand and Australia to rely on the local economy wealth production in income earned from the local economy to support the current inflated price level.
The most likely scenario is for their respective governments is to keep interest rates low, try and increase their domestic inflation rates while further depreciating their currencies to help mitigate the 'Financialization' damage that is likely to arise.
We remain cautious on these three amigo currencies.
For further information, please visit BankIntroductions.com
Thursday, June 30, 2016
Pros / Cons of Swiss Bank Accounts in Currency Terms
The historical attraction of Swiss bank accounts has been the idea of safety and tax mitigation for a large international clientele.
In our view, potential tax savings is not the key issue but rather currency safeness. Depending upon which country you call home, a Swiss based account domiciled in the local Swiss franc currency (CHF) may be a great investment or mediocre at best.
Switzerland with large foreign exchange reserves currently has an overvalued CHF currency as measured by purchasing power parity and also verbally expressed by officials form the Swiss National Bank - their central banking authority.
Let's say one wishes to open and invest monies into a well respected Swiss banking institution. The ultimate success of your investment will depend in a large part based on currency valuation and timing of your initial purchase.
With interest rates on Swiss bank accounts ranging from 0 to 1%, there is minimal return based on interest income.
However, if your home country for example is Nigeria, a CHF based account at today's valuation would have been a smart move since the Nigerian naira has declined by 20% in value over the last year.
If you were a European national say from Germany prior to January 2015 when the then Swiss franc was pegged to the euro (EUR). After de-pegging in January 2015, the Swiss franc soared by 30% in value from the 1.20 CHF to EUR to the 0.805 level. Today, the Swiss franc floats in the market with a current valuation of 1.08 CHF to buy one EUR and/or 0.98 CHF to buy one US-dollar (USD). Even with modest depreciation of the CHF from the 0.805 trading range after de-pegging, the German investor is still well ahead based on currency capital gains.
A Swiss franc bank account from a Venezuelan national a couple of years ago would have been a terrific investment as the Venezuelan bolivar has since collapsed in value. The Swiss franc provided the necessary currency stability as this is one of the key important traits worldwide investors seek.
An American investor who opened a CHF based account shortly after removal of the Swiss franc peg from the Euro back in January 2015 would be underwater on currency valuation by 15% in capital losses. Although invested monies would receive minimal interest depending on deposit size, the overall position is still in loss. Plus, US citizens must report these accounts along with the necessary paperwork to the IRS for offshore reporting and tax obligations.
Timing is everything, the U.S. investor over the last year and a half would have most likely been better off holding their monies with American banks back on the continental USA.
Every investment time frame window is different. One needs to look at currency valuations, interest rates paid on accounts and tax reporting requirements to see if an offshore investment makes sense.
A Venezuelan citizen holding bolivars for the long term is not too thrilled at this current time.
More information at BankIntroductions.com
In our view, potential tax savings is not the key issue but rather currency safeness. Depending upon which country you call home, a Swiss based account domiciled in the local Swiss franc currency (CHF) may be a great investment or mediocre at best.
Switzerland with large foreign exchange reserves currently has an overvalued CHF currency as measured by purchasing power parity and also verbally expressed by officials form the Swiss National Bank - their central banking authority.
Let's say one wishes to open and invest monies into a well respected Swiss banking institution. The ultimate success of your investment will depend in a large part based on currency valuation and timing of your initial purchase.
With interest rates on Swiss bank accounts ranging from 0 to 1%, there is minimal return based on interest income.
However, if your home country for example is Nigeria, a CHF based account at today's valuation would have been a smart move since the Nigerian naira has declined by 20% in value over the last year.
If you were a European national say from Germany prior to January 2015 when the then Swiss franc was pegged to the euro (EUR). After de-pegging in January 2015, the Swiss franc soared by 30% in value from the 1.20 CHF to EUR to the 0.805 level. Today, the Swiss franc floats in the market with a current valuation of 1.08 CHF to buy one EUR and/or 0.98 CHF to buy one US-dollar (USD). Even with modest depreciation of the CHF from the 0.805 trading range after de-pegging, the German investor is still well ahead based on currency capital gains.
A Swiss franc bank account from a Venezuelan national a couple of years ago would have been a terrific investment as the Venezuelan bolivar has since collapsed in value. The Swiss franc provided the necessary currency stability as this is one of the key important traits worldwide investors seek.
An American investor who opened a CHF based account shortly after removal of the Swiss franc peg from the Euro back in January 2015 would be underwater on currency valuation by 15% in capital losses. Although invested monies would receive minimal interest depending on deposit size, the overall position is still in loss. Plus, US citizens must report these accounts along with the necessary paperwork to the IRS for offshore reporting and tax obligations.
Timing is everything, the U.S. investor over the last year and a half would have most likely been better off holding their monies with American banks back on the continental USA.
Every investment time frame window is different. One needs to look at currency valuations, interest rates paid on accounts and tax reporting requirements to see if an offshore investment makes sense.
A Venezuelan citizen holding bolivars for the long term is not too thrilled at this current time.
More information at BankIntroductions.com
Monday, June 22, 2015
Mexico - peso to rebound in value?
The Mexican peso (MXN) has been quietly but steadily depreciating in value in relation to the
US-dollar (USD) for the last several years. In May 2011, the peso traded at 11.65 MXN to the USD. By June 2014, it further declined to 13 MXN. Over the last 12 months, a further 15 percent drop in value for the peso to the 15.3 MXN range reflecting a recent trading day quote on June 22, 2015.
Why the drop? In our view, this has more to do with a very strong USD over the last year year coupled with a dramatic decline in the world oil price. As Mexico is a large oil producer, it is implementing policies to modernize and allow for foreign investment into the industry to help foster increased hydrocarbon production going forward.
Mexico today is doing quite well on many macro economic measures including low inflation at 3%, low Central Bank interest rates at 3%, growing exports and diversification of the economy. In fact, Mexico today is one of the world's largest exporters of electronic goods - primarily to the United States. Other major industries include auto production, now the largest producer in North America. The national oil industry is spearheaded by state owned Pemex. Tourism, telecommunications, transportation, mining and agriculture also are large contributors to overall GDP.
Some analysts have Mexico pegged to be one of the world's largest economies by year 2050 in a club with China, United States, India, Brazil, Germany, United Kingdom, Russia, Nigeria, Indonesia and France. How so? Mexico has had significant and steady population growth for over 50 years now. Recent estimates have the national population of Mexico at 120 million. The other country of significance similar to Mexico with skyrocketing population growth is Nigeria.
As measured by purchasing power parity, the MXN is currently 50% undervalued to the USD. The MXN is one currency to keep your eye on for a potential rebound in currency price valuation. Although historical risks remain such as episodes of high inflation's. political instability and currency devaluations, it is likely Mexico has now entered a new era of relative currency stability.
For further insight into global currencies, please visit BankIntro.com
US-dollar (USD) for the last several years. In May 2011, the peso traded at 11.65 MXN to the USD. By June 2014, it further declined to 13 MXN. Over the last 12 months, a further 15 percent drop in value for the peso to the 15.3 MXN range reflecting a recent trading day quote on June 22, 2015.
Why the drop? In our view, this has more to do with a very strong USD over the last year year coupled with a dramatic decline in the world oil price. As Mexico is a large oil producer, it is implementing policies to modernize and allow for foreign investment into the industry to help foster increased hydrocarbon production going forward.
Mexico today is doing quite well on many macro economic measures including low inflation at 3%, low Central Bank interest rates at 3%, growing exports and diversification of the economy. In fact, Mexico today is one of the world's largest exporters of electronic goods - primarily to the United States. Other major industries include auto production, now the largest producer in North America. The national oil industry is spearheaded by state owned Pemex. Tourism, telecommunications, transportation, mining and agriculture also are large contributors to overall GDP.
Some analysts have Mexico pegged to be one of the world's largest economies by year 2050 in a club with China, United States, India, Brazil, Germany, United Kingdom, Russia, Nigeria, Indonesia and France. How so? Mexico has had significant and steady population growth for over 50 years now. Recent estimates have the national population of Mexico at 120 million. The other country of significance similar to Mexico with skyrocketing population growth is Nigeria.
As measured by purchasing power parity, the MXN is currently 50% undervalued to the USD. The MXN is one currency to keep your eye on for a potential rebound in currency price valuation. Although historical risks remain such as episodes of high inflation's. political instability and currency devaluations, it is likely Mexico has now entered a new era of relative currency stability.
For further insight into global currencies, please visit BankIntro.com
Monday, March 23, 2015
Hong Kong USD peg and China Crawling USD peg
In time, most currency pegs and currency board arrangements for well advanced developed economies ultimately dissolve. For China, they are now the second largest economy in the world only behind the United States. Of interest, is that the Chinese yuan follows a managed crawling peg to the US-dollar (USD) with a current trading value of 6.2 CNY to the USD. Five years ago, this trading value was at 6.82 CNY, so the Chinese yuan has modestly appreciated to the USD during this time.
Conversely, Hong Kong dollar (HKD) has a thin trading band currency peg to the USD in a trading range of 7.75 to 7.85 HKD to the USD. The implications for a currency board arrangement for Hong Kong is that it has imported America's low interest rate structure thus resulting in sky high real estate valuations in Hong Kong.
Currency policy can have significant impact on a great number of people in the world today. Only have to look at Greece and Venezuela, case in point.
Misguided currency policy can contribute immensely to Hong Kong's very expensive real estate which which has priced a great number of citizens out of the market. The social implications are tremendous as it has resulted in protests as the world has noticed over the last couple of years with thousands of Hong Kong residents participating in the 'umbrella' sit it.
What's next for both Hong Kong and China's currency?
Purchasing power parity suggests the Chinese currency is approximately 40 percent undervalued to the USD whilst the Hong Kong dollar is 50 percent undervalued. A revaluation of the currencies is imminent but when?
Our best educated guess is likely somewhere in the year 2017 time frame when the Chinese yuan / renminbi currency becomes fully convertible - projected time line. At this time, Hong Kong would be more inclined to give up its USD peg and either re-peg to CNY or perhaps freely float the HKD.
With significant increased capital flows and trade between Hong Kong and China, it is inevitable the USD peg is near the near the end of its story, particularly for Hong Kong with its 32 year love affair with American money.
Conversely, Hong Kong dollar (HKD) has a thin trading band currency peg to the USD in a trading range of 7.75 to 7.85 HKD to the USD. The implications for a currency board arrangement for Hong Kong is that it has imported America's low interest rate structure thus resulting in sky high real estate valuations in Hong Kong.
Currency policy can have significant impact on a great number of people in the world today. Only have to look at Greece and Venezuela, case in point.
Misguided currency policy can contribute immensely to Hong Kong's very expensive real estate which which has priced a great number of citizens out of the market. The social implications are tremendous as it has resulted in protests as the world has noticed over the last couple of years with thousands of Hong Kong residents participating in the 'umbrella' sit it.
What's next for both Hong Kong and China's currency?
Purchasing power parity suggests the Chinese currency is approximately 40 percent undervalued to the USD whilst the Hong Kong dollar is 50 percent undervalued. A revaluation of the currencies is imminent but when?
Our best educated guess is likely somewhere in the year 2017 time frame when the Chinese yuan / renminbi currency becomes fully convertible - projected time line. At this time, Hong Kong would be more inclined to give up its USD peg and either re-peg to CNY or perhaps freely float the HKD.
With significant increased capital flows and trade between Hong Kong and China, it is inevitable the USD peg is near the near the end of its story, particularly for Hong Kong with its 32 year love affair with American money.
Saturday, January 17, 2015
Swiss Short-Term Currency Traders Offside
The recent removal of the Swiss franc (CHF) currency peg to euro by the Swiss National Bank caught many short term currency traders by surprise. Long term, our view remains unchanged as we believe the CHF will ultimate decline in value relative to the USD. Today, the CHF is currently 64% overvalued to the USD as measured by purchasing power parity.
Lesson learned in major currencies like the Swiss franc and currency pegs. Surprise currency interventions and policy changes can work against your trade in the very short term with extreme currency valuations as traders cover their shorts (those betting on a short term decline of the franc to the USD and the EUR). If you are a long term trader, purchasing power parity is a good measure to determine a currency value.
In the unique case of Switzerland, their is an inherent premium built into the CHF value due to its historical lure as a safe haven currency. Further, currencies can remain in an overshoot or undershoot position much longer then most traders can stay solvent. If we assume a built in 25% purchasing power parity premium to the price of the CHF, then over the long term, their is a high probability that the CHF will ultimately decline relative to the USD back towards a 80 to 85 cent US fair value. If the currency undershoots, then 65 US to 70 US cents is possible. This could take years to achieve.
In the world of currencies, irrational market behaviour and illogical valuation can last for a very long time as perception / emotion and safe haven status premiums can artificially support an expensive currency valuation.
We prefer to take medium to long term positions rather then roll the dice in short-term currency moves thus mitigating risk from unforeseen policy decisions that can move a currency into a further illogical trading value.
Please visit BankIntroductions.com for the latest on currency rates and research.
Lesson learned in major currencies like the Swiss franc and currency pegs. Surprise currency interventions and policy changes can work against your trade in the very short term with extreme currency valuations as traders cover their shorts (those betting on a short term decline of the franc to the USD and the EUR). If you are a long term trader, purchasing power parity is a good measure to determine a currency value.
In the unique case of Switzerland, their is an inherent premium built into the CHF value due to its historical lure as a safe haven currency. Further, currencies can remain in an overshoot or undershoot position much longer then most traders can stay solvent. If we assume a built in 25% purchasing power parity premium to the price of the CHF, then over the long term, their is a high probability that the CHF will ultimately decline relative to the USD back towards a 80 to 85 cent US fair value. If the currency undershoots, then 65 US to 70 US cents is possible. This could take years to achieve.
In the world of currencies, irrational market behaviour and illogical valuation can last for a very long time as perception / emotion and safe haven status premiums can artificially support an expensive currency valuation.
We prefer to take medium to long term positions rather then roll the dice in short-term currency moves thus mitigating risk from unforeseen policy decisions that can move a currency into a further illogical trading value.
Please visit BankIntroductions.com for the latest on currency rates and research.
Wednesday, October 29, 2014
Expensive & Cheap Currencies - Update
In the world of currencies, one thing is a given is that 'value' is constantly shifting. Over the last three months, we have seen a significant appreciation in the US-dollar (USD) with massive capital inflows into the US banking system & economy.
Of interest, the USD price of gold bullion has actually held steady during this dramatic USD currency price increase staying close to the 1250 USD level. As measured in other currencies, gold has slightly risen in value. For example, as priced in Canadian dollars, gold is in the $1360 to $1400 CAD level per ounce of gold.
Of short term immediate consequence for gold bullion is the scheduled vote on November 30, 2014 by Swiss voters in a referendum to either approve or disapprove a ballot measure to increase the Swiss central bank reserves from its current 7.7% gold bullion holdings of $550 billion total reserves to a 20% ceiling. If a YES vote takes place, there is a greater chance that Switzerland may ultimately go ahead and purchase over the next 5 years upwards of 1500 tonnes of gold bullion to satisfy the 20% threshold. The Swiss franc will indeed truly be one of the world's only gold back safe haven currencies. The price of gold bullion will also get a price boost from this demand shock.
For those planning holiday schedules.
CHEAP CURRENCIES - that is, great value for your money remain Russia, Turkey and South Africa. All three currency zones have their domestic currencies at around 50% undervalued to the USD. Other attractive currency zones include Mexico, Hungary, Poland and South Korea.
EXPENSIVE CURRENCIES: our list still have Switzerland as the most expensive and the world's most expensive industrialized currency zone as measured by purchasing power parity. Other big money expensive currency zones include Norway, Denmark and surprisingly Australia as the AUD remains at 10% overvalued even after commodity price correction.
Final comment, the dramatic drop in oil price has knocked the value of the Canadian dollar down along with the Russian ruble, etc.. The CAD still remains even with this large price correction in commodities still overvalued at today's level by 10%, risk remains for the CAD to drop to the low 80 US cent level in year 2015 from the current 89 to 90 US cent level.
Of interest, the USD price of gold bullion has actually held steady during this dramatic USD currency price increase staying close to the 1250 USD level. As measured in other currencies, gold has slightly risen in value. For example, as priced in Canadian dollars, gold is in the $1360 to $1400 CAD level per ounce of gold.
Of short term immediate consequence for gold bullion is the scheduled vote on November 30, 2014 by Swiss voters in a referendum to either approve or disapprove a ballot measure to increase the Swiss central bank reserves from its current 7.7% gold bullion holdings of $550 billion total reserves to a 20% ceiling. If a YES vote takes place, there is a greater chance that Switzerland may ultimately go ahead and purchase over the next 5 years upwards of 1500 tonnes of gold bullion to satisfy the 20% threshold. The Swiss franc will indeed truly be one of the world's only gold back safe haven currencies. The price of gold bullion will also get a price boost from this demand shock.
For those planning holiday schedules.
CHEAP CURRENCIES - that is, great value for your money remain Russia, Turkey and South Africa. All three currency zones have their domestic currencies at around 50% undervalued to the USD. Other attractive currency zones include Mexico, Hungary, Poland and South Korea.
EXPENSIVE CURRENCIES: our list still have Switzerland as the most expensive and the world's most expensive industrialized currency zone as measured by purchasing power parity. Other big money expensive currency zones include Norway, Denmark and surprisingly Australia as the AUD remains at 10% overvalued even after commodity price correction.
Final comment, the dramatic drop in oil price has knocked the value of the Canadian dollar down along with the Russian ruble, etc.. The CAD still remains even with this large price correction in commodities still overvalued at today's level by 10%, risk remains for the CAD to drop to the low 80 US cent level in year 2015 from the current 89 to 90 US cent level.
Tuesday, June 10, 2014
Gold & Silver USD price Break Out is Imminent
Gold has stagnated trading in a flat line now for the last few months in the 1250 to 1325 USD / ounce
price range - more recently trading in the 1250 USD / oz price.
In early June 2014, a modest earthquake hit the markets with the European Central Bank (ECB) deciding to lower two key interest rates. The ECB refinancing rate goes to plus 0.15% down from 0.25%. However, it is the ECB's decision to move the interest rate for banks depositing monies with the ECB to negative 0.1 percent, this policy move is the initial fuel to start a major fire within the global gold market.
That is, banks now pay the ECB to hold their money instead of receiving interest. The central bank is implementing this negative rate to try and encourage European banks to lend the money to help foster economic growth within the currency union.
With current inflation in the Eurozone at 0.5%, well below the 2% target, the central bank is now pulling several levers to stimulate the velocity of money and encourage domestic inflation within the common currency zone.
Also, keep your eye on the U.S. Federal reserve to perhaps surprise the markets in July 2014 with a pause on tapering. This too would add much bullish sentiment to USD gold price going forward with silver following the trajectory of gold but likely at a faster velocity of USD price rise then gold.
In our view, we believe that gold is now very close to a major turn back north in price towards 1400 to 1500 USD / oz by year-end 2014. By year 2016 - 2017, inflation will return to modest levels within the United States and Europe, thus we expect gold prices to be over 1700 USD.
Finally, gold priced in other currencies such as Canadian will account for CAD dollar depreciation, expect much higher CAD dollar gold prices going forward. Over the last year for example, CAD gold is only down 3.4% whilst USD price gold is down 9.73%. Our research suggests a medium term floor price for the CAD further depreciating to the 83 US cent level. If the oil market makes a major turn south in price, this forecast could be further revised downward with a new floor in the mid 70 USD cent range for each CAD.
A quick general snapshot on currency valuations shows heightened risk for the Swiss franc (CHF) with the CHF maintaining upwards of a 55% purchasing power overvaluation to USD. A good time to buy gold in CHF is right now. Conversely, the Turkish lira is upwards of 50% undervalued to the USD, a good time to accumulate and hold lira currency in our view.
For further research on currencies, please visit us at: http://www.bankintroductions.com
price range - more recently trading in the 1250 USD / oz price.
In early June 2014, a modest earthquake hit the markets with the European Central Bank (ECB) deciding to lower two key interest rates. The ECB refinancing rate goes to plus 0.15% down from 0.25%. However, it is the ECB's decision to move the interest rate for banks depositing monies with the ECB to negative 0.1 percent, this policy move is the initial fuel to start a major fire within the global gold market.
That is, banks now pay the ECB to hold their money instead of receiving interest. The central bank is implementing this negative rate to try and encourage European banks to lend the money to help foster economic growth within the currency union.
With current inflation in the Eurozone at 0.5%, well below the 2% target, the central bank is now pulling several levers to stimulate the velocity of money and encourage domestic inflation within the common currency zone.
Also, keep your eye on the U.S. Federal reserve to perhaps surprise the markets in July 2014 with a pause on tapering. This too would add much bullish sentiment to USD gold price going forward with silver following the trajectory of gold but likely at a faster velocity of USD price rise then gold.
In our view, we believe that gold is now very close to a major turn back north in price towards 1400 to 1500 USD / oz by year-end 2014. By year 2016 - 2017, inflation will return to modest levels within the United States and Europe, thus we expect gold prices to be over 1700 USD.
Finally, gold priced in other currencies such as Canadian will account for CAD dollar depreciation, expect much higher CAD dollar gold prices going forward. Over the last year for example, CAD gold is only down 3.4% whilst USD price gold is down 9.73%. Our research suggests a medium term floor price for the CAD further depreciating to the 83 US cent level. If the oil market makes a major turn south in price, this forecast could be further revised downward with a new floor in the mid 70 USD cent range for each CAD.
A quick general snapshot on currency valuations shows heightened risk for the Swiss franc (CHF) with the CHF maintaining upwards of a 55% purchasing power overvaluation to USD. A good time to buy gold in CHF is right now. Conversely, the Turkish lira is upwards of 50% undervalued to the USD, a good time to accumulate and hold lira currency in our view.
For further research on currencies, please visit us at: http://www.bankintroductions.com
Friday, December 20, 2013
Cheap and Expensive Currencies
The Turkish Lira is currently hitting a record low to the US dollar at 2.095 TL whilst as measured by purchasing power parity, the lira remains at just over 50% undervalued to the US dollar (USD). If one earns USD as income, then Turkey remains a favorable spot for inexpensive travel.
The Russian ruble is also tremendously undervalued to the USD at approximately 45%. Tourist travel to Russia is affordable in most places as restaurant meals, souvenirs - gifts etc will provide for a bonus purchasing power for those with US dollars. A good restaurant meal with wine will likely set two diners back around $60 to $70 USD in many parts of Russia while the same equivalent type meal in the United States will be just over $100 USD.
South Africa is another country that provides for a sale on its currency for tourists.
Venezuela's currency is in free fall - hard currency is in significant demand as the local currency bolivar is now at threat to very high inflation.
Expensive currencies have Switzerland at the top of the list as the Swiss franc (CHF) is upwards of 60% overvalued to the USD as measured by purchasing power parity. A good restaurant meal with wine in Switzerland would be closer to $200 USD for two.
Norway is another expensive country to visit as is Australia. The Australian dollar is about 30% overvalued to the USD.
It should be noted that currencies can remain offside with purchasing power parity for several years but eventually they do ultimately correct in value.
For now, Turkey remains again for another year as one of the most affordable places to visit as measured by purchasing power parity currency valuations.
The Russian ruble is also tremendously undervalued to the USD at approximately 45%. Tourist travel to Russia is affordable in most places as restaurant meals, souvenirs - gifts etc will provide for a bonus purchasing power for those with US dollars. A good restaurant meal with wine will likely set two diners back around $60 to $70 USD in many parts of Russia while the same equivalent type meal in the United States will be just over $100 USD.
South Africa is another country that provides for a sale on its currency for tourists.
Venezuela's currency is in free fall - hard currency is in significant demand as the local currency bolivar is now at threat to very high inflation.
Expensive currencies have Switzerland at the top of the list as the Swiss franc (CHF) is upwards of 60% overvalued to the USD as measured by purchasing power parity. A good restaurant meal with wine in Switzerland would be closer to $200 USD for two.
Norway is another expensive country to visit as is Australia. The Australian dollar is about 30% overvalued to the USD.
It should be noted that currencies can remain offside with purchasing power parity for several years but eventually they do ultimately correct in value.
For now, Turkey remains again for another year as one of the most affordable places to visit as measured by purchasing power parity currency valuations.
Friday, September 20, 2013
Currency Valuations for Travel Ideas - Fall 2013
For most of us, the total cost of a vacation is likely the number one reason for choosing a holiday destination. If one is just looking at currency valuations, here are three countries you may want to consider: Russia, Argentina and India.
The Russian ruble is now approximately 40% undervalued to the USD. This time of year, one can also find for the most part reduced airline ticket prices. If you can get a half decent deal on a flight, then most likely hotel prices & food are likely to be at a significant discount if you arriving from a USD, EUR, JPY, GBP CAD currency zone for example.
The Indian rupee has experienced a dramatic decline of over 20% during the summer. What about Argentina? Local currency chaos as usual. Not good if you are earning income and living full time in Argentina based on currency purchasing power parity, but a terrific deal if you are tourist visiting the country. In Argentina, you will be fine dining at a fraction of the cost of your home currency zone country.
So skip the usual spots in Western Europe to North America and go somewhere exciting & exotic like India, Argentina and Russia!!
The Russian ruble is now approximately 40% undervalued to the USD. This time of year, one can also find for the most part reduced airline ticket prices. If you can get a half decent deal on a flight, then most likely hotel prices & food are likely to be at a significant discount if you arriving from a USD, EUR, JPY, GBP CAD currency zone for example.
The Indian rupee has experienced a dramatic decline of over 20% during the summer. What about Argentina? Local currency chaos as usual. Not good if you are earning income and living full time in Argentina based on currency purchasing power parity, but a terrific deal if you are tourist visiting the country. In Argentina, you will be fine dining at a fraction of the cost of your home currency zone country.
So skip the usual spots in Western Europe to North America and go somewhere exciting & exotic like India, Argentina and Russia!!
Thursday, May 9, 2013
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.
Protect yourself, diversify your wealth amongst several of the world's most stable currencies. Visit http://www.bankintroductions.com for further knowledge.
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.
Protect yourself, diversify your wealth amongst several of the world's most stable currencies. Visit http://www.bankintroductions.com for further knowledge.
Wednesday, December 5, 2012
Big Pussy Cat to Emerging Tiger - Philippines
The Philippines peso (PHP) is hitting close to a 5 year high in valuation when compared to the US-dollar (USD). On December 5, 2012, the peso closed at 40.85 PHP. The peso is now anchored by low inflation running at 2.8% (November 2012), a country very rich in natural resources (energy and mineral resources) and spearheaded by very competent political management under the leadership of President Aquino.
This is quite a currency appreciation move by the PHP. In August 2009, the peso was trading at 48.25 PHP to the USD, a gain of almost 16% when compared to today's valuation.
Keep your eye on the Philippines. Although vulnerable to typhoons as witnessed with yesterday's tragic storm strike on Eastern Mindanao Island (southern Philippines), the country is vibrant, economic growth is strong. Expect to see the political leaders to continue to invest in energy infrastructure, roads, health & education whilst maintaining a balance with the environment and industry growth in mining, energy and manufacturing sectors.
This time, the peso may very well continue to appreciate even further neglecting previous cyclical trading cycles. A more prosperous Philippines in the years is inevitable, indeed, an emerging tiger rooted in the country's rich natural resources.
For more information on currencies, please visit BankIntroductions.com:
http://www.bankintroductions.com/
This is quite a currency appreciation move by the PHP. In August 2009, the peso was trading at 48.25 PHP to the USD, a gain of almost 16% when compared to today's valuation.
Keep your eye on the Philippines. Although vulnerable to typhoons as witnessed with yesterday's tragic storm strike on Eastern Mindanao Island (southern Philippines), the country is vibrant, economic growth is strong. Expect to see the political leaders to continue to invest in energy infrastructure, roads, health & education whilst maintaining a balance with the environment and industry growth in mining, energy and manufacturing sectors.
This time, the peso may very well continue to appreciate even further neglecting previous cyclical trading cycles. A more prosperous Philippines in the years is inevitable, indeed, an emerging tiger rooted in the country's rich natural resources.
For more information on currencies, please visit BankIntroductions.com:
http://www.bankintroductions.com/
Friday, November 2, 2012
Travel: Look for Cheap Currency - TURKEY New Lira
In search of a place to travel that provides affordability, culture and a terrific climate. Look no further then the Republic of Turkey, situated as the gateway between Europe and Asia. Turkey is a democratic, secular nation that currently provides foreign tourists with a very cheap currency.
Why spend a fortune within European Union member countries such as France, Germany that function on the expensive Euroland euro (EUR) currency when one can enjoy a tremendous currency advantage with Turkey's cheap currency, the Turkish New Lira.
In January 2008, the Turkish new lira was trading at 1.175 TRY to 1 US dollar (USD). Today, almost 5 years later the new lira has dramatically declined in value to 1.8026 TRY to 1 USD. As measured by purchasing power parity, the TRY stands at 45 percent undervalued to the USD.
If you like Mediterranean climate, historical culture, beautiful scenery, exotic beach resorts and an inexpensive currency, take a look at Turkey!
Why spend a fortune within European Union member countries such as France, Germany that function on the expensive Euroland euro (EUR) currency when one can enjoy a tremendous currency advantage with Turkey's cheap currency, the Turkish New Lira.
In January 2008, the Turkish new lira was trading at 1.175 TRY to 1 US dollar (USD). Today, almost 5 years later the new lira has dramatically declined in value to 1.8026 TRY to 1 USD. As measured by purchasing power parity, the TRY stands at 45 percent undervalued to the USD.
If you like Mediterranean climate, historical culture, beautiful scenery, exotic beach resorts and an inexpensive currency, take a look at Turkey!
Monday, March 26, 2012
Japanese Yen close to cyclical turn?
For decades during a time of rapid economic growth and a debt deflationary period since 1990, the yen has steadily appreciated in value from the 360 JPY to the USD in 1949 to as high as 76.72 JPY to the USD recently in October 2011. Are we now at a major cyclical turning point for the yen?
BankINTRO.com thinks so. We think the yen will now enter a multi - year phase of modest depreciation. Not a crash, but a gradual slow period of declining currency valuations as the Japanese authorities try to nudge inflation to positive rates from modest deflationary measures. The good news is that the Japanese stock market may now turn into a bullish era as well from a devastating 20 year bear market.
Taxes remain on the whole quite low in Japan, they have room to move here to raise badly needed revenues to begin the process of bringing down the national gross debt which is out of control at over 200 percent of GDP. Not an entirely desperate situation as most of the debt is internally held by Japanese but a concern. Rating agencies have taken notice and put Japan on currency watch. These macro-economic challenges along with a declining population have the earmarks of modest yen currency decline in the years ahead. At present, the yen is approximately 35 percent overvalued to the USD as measured by purchasing power parity.
For more information on global currencies, please visit http://www.bankintroductions.com
BankINTRO.com thinks so. We think the yen will now enter a multi - year phase of modest depreciation. Not a crash, but a gradual slow period of declining currency valuations as the Japanese authorities try to nudge inflation to positive rates from modest deflationary measures. The good news is that the Japanese stock market may now turn into a bullish era as well from a devastating 20 year bear market.
Taxes remain on the whole quite low in Japan, they have room to move here to raise badly needed revenues to begin the process of bringing down the national gross debt which is out of control at over 200 percent of GDP. Not an entirely desperate situation as most of the debt is internally held by Japanese but a concern. Rating agencies have taken notice and put Japan on currency watch. These macro-economic challenges along with a declining population have the earmarks of modest yen currency decline in the years ahead. At present, the yen is approximately 35 percent overvalued to the USD as measured by purchasing power parity.
For more information on global currencies, please visit http://www.bankintroductions.com
Thursday, December 29, 2011
BankINTRO.com now on TWITTER!
Follow currency movements and important global banking news on twitter at BankINTRO.com
Swiss franc (CHF) is currently 60% overvalued to USD as measured by PPP, visit bankintroductions.com currency index for currency info.
Over the last 5 months, the CHF currency valuation has fallen from the 90 percent overvaluation to the USD to the current 60 percent valuation as measured by purchasing power parity. This is a significant haircut in valuation for a currency widely recognized for its historical safe haven mystique.
Swiss franc (CHF) is currently 60% overvalued to USD as measured by PPP, visit bankintroductions.com currency index for currency info.
Over the last 5 months, the CHF currency valuation has fallen from the 90 percent overvaluation to the USD to the current 60 percent valuation as measured by purchasing power parity. This is a significant haircut in valuation for a currency widely recognized for its historical safe haven mystique.
Thursday, November 3, 2011
Spectacular Rise and Fall of the Swiss Franc (CHF)
Over the last few months, the Swiss franc valuation has taken a wild ride at the amusement park. During the height of the Euro crisis in August 2011, their was a significant currency hot money move towards safe haven currencies whereby the Swiss franc was one of the biggest beneficiaries. The CHF peaked at 1.37 USD to buy 1 CHF, today this valuation sits closer to 1.12 USD.
The party came to an end when the Swiss authorities in September 2011 capped the CHF valuation to a level of 1.2 CHF to the Euro (EUR) which resulted in a spectacular 25 cent US correction. But is the hangover from the party over? Purchasing power parity suggest the CHF is still the most overvalued industrialized currency in the world today in relation to the USD with a 72% overvaluation for the CHF.
The Swiss National Bank, the country's central bank has signaled strong intentions to prevent another hot money run on the CHF as a fast dramatic rise in the Swiss franc greatly harms Swiss exports. With Swiss interest rates close to zero and deposit accounts paying 0.5% to 2% for various terms, one may want to take a look at the CHF currency moves as it has shown tremendous price volatility.
The party came to an end when the Swiss authorities in September 2011 capped the CHF valuation to a level of 1.2 CHF to the Euro (EUR) which resulted in a spectacular 25 cent US correction. But is the hangover from the party over? Purchasing power parity suggest the CHF is still the most overvalued industrialized currency in the world today in relation to the USD with a 72% overvaluation for the CHF.
The Swiss National Bank, the country's central bank has signaled strong intentions to prevent another hot money run on the CHF as a fast dramatic rise in the Swiss franc greatly harms Swiss exports. With Swiss interest rates close to zero and deposit accounts paying 0.5% to 2% for various terms, one may want to take a look at the CHF currency moves as it has shown tremendous price volatility.
Tuesday, June 7, 2011
Update - Purchasing Power Parity on Selective Currencies
As of June 6, 2011, here is an eye opening snapshot on the state of some major industrialized currencies:
As measured by purchasing power parity in relation to the US dollar (USD)
Overvaluation exists for the following:
Swiss franc (CHF) at 81 percent
Norwegian krone (NOK) at 70 percent
Australian dollar (AUD) at 64 percent
Swedish krone (SEK) at 45 percent
Japanese yen (JPY) at 38 percent
Currency undervaluation:
Russian ruble is 42 percent undervalued to the USD
Mexican peso at 33 percent
So, if you are an American tourist, you may want to look at Mexico and Russia as countries to visit as many other countries even including the Eurozone is pricey at today's currency valuations.
As measured by purchasing power parity in relation to the US dollar (USD)
Overvaluation exists for the following:
Swiss franc (CHF) at 81 percent
Norwegian krone (NOK) at 70 percent
Australian dollar (AUD) at 64 percent
Swedish krone (SEK) at 45 percent
Japanese yen (JPY) at 38 percent
Currency undervaluation:
Russian ruble is 42 percent undervalued to the USD
Mexican peso at 33 percent
So, if you are an American tourist, you may want to look at Mexico and Russia as countries to visit as many other countries even including the Eurozone is pricey at today's currency valuations.
Friday, February 25, 2011
The Impact of Interest Rates on Currency Rates
We permission from a very helpful currency portal, we post the following compliments of the following web site: http://ratesofcurrency.co.uk
The Advantages of Currency Trading
People usually carry credit cards or prepaid cards but still there is a dire need to stack up some cash in the wallet. In case the ATM is not working or In case there are some technical problems in accessing the respective card and so on, there are many unplanned things which may jeopardize the comforts and luxuries of your travel .
While exchanging the currency you may be lured by the signs like "Commission free exchange" which in many cases is nothing but a sweetener . You may well be manipulated in ways that may provide you with not so good rate. You can do two things, either you do not go to these agencies or if you go then ensure that you are well aware of the existing value of your currency in the concerned country which can help in negotiating. It is feasible to look for those companies that charge any commission as they may give you a rate that provide best value for the cash .
Many fundamental factors determine the supply and demand for a particular currency and its value against other currencies . Among these factors are interest rates. Central banks are the institutions that set the base rates in a country and change their levels to streamline the development of the local economy. Increasing the interest rate will result will in raising value of the nation’s currency while lowering interest rates should have the opposite effect, respectively .
Financial dictionaries describe currency depreciation as a process when a currency loses its value against another currency or basket of currencies. In such cases, more units of a local currency are needed to purchase the foreign currency i.e. if one British pound was able to purchase two U.S. dollars on a few years ago and now you receive 1.6 U.S. dollars for one British pound, then the pound has depreciated. Depreciation is a process driven by market forces and all fluctuations of currency rates reflect the present market conditions, forming the market value of a particular currency pair .
The currency depreciation can effect positively the overall economic development, though. It boosts competitiveness through lower export costs and secures more income from exported goods in a similar way devaluation does . On the contrary, depreciation makes imports more expensive and discourages purchases of imported goods stimulating demand for domestically manufactured goods. The governments worldwide influence appreciation and depreciation utilising the powerful tool of the base interest rates, which are usually set by the country's central bank and this tool is often used to intentionally depreciate the currency rates to encourage exports .
THE ABOVE POST IS COMPLIMENTS OF http://ratesofcurrency.co.uk
While exchanging the currency you may be lured by the signs like "Commission free exchange" which in many cases is nothing but a sweetener . You may well be manipulated in ways that may provide you with not so good rate. You can do two things, either you do not go to these agencies or if you go then ensure that you are well aware of the existing value of your currency in the concerned country which can help in negotiating. It is feasible to look for those companies that charge any commission as they may give you a rate that provide best value for the cash .
Many fundamental factors determine the supply and demand for a particular currency and its value against other currencies . Among these factors are interest rates. Central banks are the institutions that set the base rates in a country and change their levels to streamline the development of the local economy. Increasing the interest rate will result will in raising value of the nation’s currency while lowering interest rates should have the opposite effect, respectively .
Financial dictionaries describe currency depreciation as a process when a currency loses its value against another currency or basket of currencies. In such cases, more units of a local currency are needed to purchase the foreign currency i.e. if one British pound was able to purchase two U.S. dollars on a few years ago and now you receive 1.6 U.S. dollars for one British pound, then the pound has depreciated. Depreciation is a process driven by market forces and all fluctuations of currency rates reflect the present market conditions, forming the market value of a particular currency pair .
The currency depreciation can effect positively the overall economic development, though. It boosts competitiveness through lower export costs and secures more income from exported goods in a similar way devaluation does . On the contrary, depreciation makes imports more expensive and discourages purchases of imported goods stimulating demand for domestically manufactured goods. The governments worldwide influence appreciation and depreciation utilising the powerful tool of the base interest rates, which are usually set by the country's central bank and this tool is often used to intentionally depreciate the currency rates to encourage exports .
THE ABOVE POST IS COMPLIMENTS OF http://ratesofcurrency.co.uk
Wednesday, December 29, 2010
Swiss franc (CHF) overvaluation
As of today's entry, it now takes a $1.05 USD to buy one Swiss franc, an amazing trajectory skyward for the Swiss franc where it was only back in year 2005 where it traded as low as 77 US cents for one CHF. If one looks at purchasing power parity, the charts show the Swiss franc as the world's most overvalued currency in the industrialized world now at 70 percent overvaluation to the US-dollar (USD). Beautiful Swiss scenery, the lure of Swiss chocolates, clocks and private banking may not be enough to prevent the CHF experience a modest currency correction in 2011.
For more information about currencies and global banking, please visit BankIntroductions.com
For more information about currencies and global banking, please visit BankIntroductions.com
Tuesday, October 19, 2010
Currency Valuations as Suggested by Purchasing Power Parity
The concept of purchasing power parity (PPP) suggests that a country's exchange rate in relation to other countries' currency exchange valuations are in equilibrium when their actual purchasing power are the same in each of the two compared countries. Hence, the exchange rate between two countries in theory should equal the ratio of the two countries' price level for a fixed basket of products / goods & services.The Economist magazine (UK based) publishes a well known Burger Index comparing the price of a McDonald's Big Mac in various countries using the price of a United States made Big Mac as the base value. Recently, purchasing power parity has made some candid observations about currency valuations:
Switzerland's franc (CHF) is heavily overvalued in relation to the US dollar
The Chinese yuan renminbi is undervalued. If you happen to find yourself in China and hungry, a Chinese made Big Mac will be very affordable especially if you are traveling from Europe.
Currencies that appear to be significantly overvalued to the USD are Denmark, Norway, Sweden, Canada by upwards of 15 to 20% and Japan.
Undervalued currencies include Russia, many Asian countries such as the Philippines, South Korea, Hong Kong / China, Malaysia, etc. Surprisingly, countries like Poland, Mexico, Hungry and Turkey are other countries that PPP suggests that their currencies undervalued.
Commodity currencies such as Brazil, Australia, New Zealand, Canada appear to be headed for a correction. Our forecasts at BankIntroductions.com calls for a short term reversal in valuation for the USD as it has had a difficult three months with expected QE2 on the horizon this November 2010. In our view, it seems the market has already priced this in the USD currency valuation and the market may rally the USD on the actual day of event of quantitative easing round number two. It is the reverse to what logic suggests.
Sort of like buy on mystery, sell on the news!
The Euroland euro (EUR) at this time also looks a little frothy as they have significant economic challenges of their own including member countries Greece, Portugal and Spain experiencing economic headwinds. France is in the midst of labor revolt. This euro overvaluation is confirmed by PPP with a 20% overvaluation rating for EUR in relation to the USD.
Interesting times in the world of currencies. Our short term bet is to hold USD; gold bullion may have a correction of upwards of $200 USD an ounce over the next few months.
Happy speculating this Halloween season!
Switzerland's franc (CHF) is heavily overvalued in relation to the US dollar
The Chinese yuan renminbi is undervalued. If you happen to find yourself in China and hungry, a Chinese made Big Mac will be very affordable especially if you are traveling from Europe.
Currencies that appear to be significantly overvalued to the USD are Denmark, Norway, Sweden, Canada by upwards of 15 to 20% and Japan.
Undervalued currencies include Russia, many Asian countries such as the Philippines, South Korea, Hong Kong / China, Malaysia, etc. Surprisingly, countries like Poland, Mexico, Hungry and Turkey are other countries that PPP suggests that their currencies undervalued.
Commodity currencies such as Brazil, Australia, New Zealand, Canada appear to be headed for a correction. Our forecasts at BankIntroductions.com calls for a short term reversal in valuation for the USD as it has had a difficult three months with expected QE2 on the horizon this November 2010. In our view, it seems the market has already priced this in the USD currency valuation and the market may rally the USD on the actual day of event of quantitative easing round number two. It is the reverse to what logic suggests.
Sort of like buy on mystery, sell on the news!
The Euroland euro (EUR) at this time also looks a little frothy as they have significant economic challenges of their own including member countries Greece, Portugal and Spain experiencing economic headwinds. France is in the midst of labor revolt. This euro overvaluation is confirmed by PPP with a 20% overvaluation rating for EUR in relation to the USD.
Interesting times in the world of currencies. Our short term bet is to hold USD; gold bullion may have a correction of upwards of $200 USD an ounce over the next few months.
Happy speculating this Halloween season!
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