Gold, Silver, and Currencies

American companies that generate a lot of their revenues overseas are facing uncertainty over the dollar's surge. The Financial Times reports: A surging dollar creates good headlines for Americans looking to travel or send money abroad. But for US companies that generate a big chunk of their earnings overseas, the greenback’s gain has become a serious pain. The US Dollar Index, which tracks the buck against six other important currencies, is at a near 20-year high. It is up 19 per cent since the start of the year and continues rising. The euro has slipped below parity against the dollar … [Read more...]

New Prime Minister of the UK, Liz Truss, and her team have announced a new plan to cut taxes and spend more. Max Colchester, Anna Hirtenstein, and David Luhnow report for The Wall Street Journal: The British government unveiled the country’s biggest tax cuts since the early 1970s, the boldest move by an industrialized country to kick-start growth at a time when stubbornly high inflation stalks the global economy. Financial markets reacted negatively, prompting a slide in the pound and a big jump in government bond yields, underscoring the difficult choices facing governments as they face a … [Read more...]

Japan has intervened in its currency market for the first time since 1998 to stablilize the yen. Kana Inagaki and Leo Lewis report for the Financial Times: Japan intervened to strengthen the yen for the first time since the late 1990s on Thursday, after the currency tumbled to a 24-year low on pledges by the central bank to stick with its ultra-loose policy. Masato Kanda, the country’s top currency official, said the government had “taken decisive action” to address what it warned was a “rapid and one-sided” move in the foreign exchange market. It was the first time Japan had sold dollars … [Read more...]

A Canadian pension fund, the nation's second-largest, Caisse de dépôt et placement du Québec (CDPQ), is writing off its investment in cryptocurrency lending platform, Celsius Network. The write-off will be $150 million. Explaining the disaster, the fund's chief executive, Charles Emond, explained that "we went in too soon into a sector that was in transition." Scott Chipolina and Josephine Cumbo report in the Financial Times: Canada’s second largest pension fund manager has written off its $150mn investment in crypto lending platform Celsius Network and conceded it went into crypto “too … [Read more...]

Cryptocurrency markets are still in the "wild" stage of their development, despite all the money involved. In the Financial Times, Lex analyzes the state of the crypto market today, writing: In percentage terms, the cryptocurrency crash of 2018 was worse than the winter that is currently gripping crypto markets. The difference this time round is the amount of money involved. In 2018, about $700bn was wiped from the market’s high point, according to price-tracking site CoinGecko. So far this year, the crypto market’s value has fallen by more than $1.2tn. To that total can be added millions … [Read more...]

In an extensive article in the Financial Times, Willem Buiter and Anne Sibert explain the benefits and problems with stablecoins, and how to maximize and solve them respectively. They write: As the world of decentralised finance continues to grow, there is much demand for a digital currency fit for use in blockchain-based applications with near-real-time, peer-to-peer global settlement that can be used as a medium of exchange. However, most cryptocurrencies are too volatile for this and there are also issues with central bank digital currencies. CBDCs may not be based on the distributed … [Read more...]

The Swiss National Bank hasn't raised the country's interest rates since 2007, but today the bank surprised the world with a rate increase. Sam Jones and Tommy Stubbington report for the Financial Times: Switzerland’s central bank on Thursday raised interest rates for the first time in 15 years, as it became the latest rate-setter to shift away from ultra-loose monetary policy. The Swiss National Bank said its benchmark rate would rise by 50 basis points from minus 0.75 per cent to minus 0.25 per cent, catching markets off guard. The Swiss franc surged following the surprise decision, … [Read more...]

MicroStrategy, a company founded to sell data mining services and software, has watched its stock price stumble as bitcoin prices collapse. The problem for MicroStrategy is that its management essentially turned the company into a bitcoin fund with shareholder money. The latest drop in bitcoin prices has cost the company nearly $1 billion. Matt Turner reports for Bloomberg: MicroStrategy Inc. founder and Chief Executive Officer Michael Saylor’s big bet on Bitcoin has backfired in a major way as the paper loss for his firm’s holdings of the largest digital asset has reached roughly $1 … [Read more...]

In a long-prepared set of new regulations, Japan has set stricter rules on stablecoins and their issuance in order to protect consumers and the Japanese economy from potential volatility. Leo Lewis and Kana Inagaki report for the Financial Times: Japan has passed a landmark law clarifying the legal status of stablecoins, surging ahead in an international race to construct safety nets around the tokens whose peg to mainstream currencies underpins the broader cryptocurrency market. The move by Japan, part of a five-year effort to protect consumers investing in cryptocurrencies, followed last … [Read more...]

Big banks BNP Paribas and JPMorgan are using digital tokens in their short-term trading operations. Eva Szalay reports for the Financial Times: JPMorgan’s blockchain allow banks to lend out US government bonds for a few hours as collateral, without the bonds leaving their balance sheets. Post-crisis regulatory requirements demand that banks hold large amounts of liquid assets — which can be bought and sold easily even during times of market stress — such as Treasuries as a safety buffer. By tokenising these assets banks can temporarily turn them into collateral for a few hours, but without … [Read more...]