FOREX FLASH
Bank fuels new high for the pound
Sterling hit its highest level in a year against the US dollar yesterday after Bank of England MPC member Andrew Sentance said in a speech on Monday night that he believed the UK had emerged from recession and that loose monetary policy cannot continue indefinitely.
Mark O’Sullivan at Currencies Direct said: “Today’s comments mark the end of talking down the pound from the top in order to help exporters and its time for the sterling bulls to be let loose.”
IMF renews call for global currency
There were yet further calls yesterday for a new global currency to replace the US dollar. Dominique Strauss-Kahn, managing director of the IMF, said that the need for greater global currency stability means that the world can no longer rely on a currency issued by a single country. Strauss-Kahn envisages that a new global currency might evolve out of the IMF’s Special Drawing Right facility and that it would have to be a basket of currencies.
RBA minutes push Aussie lower
The Australian dollar has been one of the outperformers in 2009 but it was one of the biggest losers among major currencies early on Tuesday. It slipped back from 15-month highs of $0.9407 to $0.9305 after the Reserve Bank of Australia’s minutes indicated that the pace of further tightening was uncertain. Australia was the first major economy to tighten rates.
Brazil is in the market for dollars
Brazil’s central bank yesterday offered to buy US dollars on the spot foreign exchange market in an attempt to boost the country’s international currency reserves and to soak up the large number of dollars that are pouring into the emerging market in search of high returns. The central bank has bought $6.7bn in October alone on the spot forex market to stem further appreciation of the real.
China silent on yuan policy
At a summit held in Beijing with Chinese President Hu Jintao, USPresident Obama yesterday urged China to let the yuan rise. But Hu avoided talking about either the dollar or the yuan peg.