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☆ Zimbabwe just introduced a new gold-backed currency in an attempt to fight inflation and wean off the US dollar
▼ + stars: | 2024-04-09 | by ( Huileng Tan | ) www.businessinsider.com time to read: +3 min

Last week, the country's central bank introduced a new gold-backed currency called Zimbabwe Gold, or ZiG, in an attempt to tame price gains that reached a seven-month high of 55% in March. The Zimbabwe dollar — the currency the country most recently used — has tanked 80% this year alone. AdvertisementOn Thursday, Zimbabwe's central bank governor, John Mushayavanhu, said the country has real gold and mineral assets to back up the new ZiG currency. The ZiG started trading on Monday at an exchange rate of 13.56 to the dollar set by the central bank. AdvertisementHowever, moving to the new ZiG currency could solve at least one problem, for a start: a shortage of US coins.

Persons: —, There's, John Mushayavanhu, Mushayavanhu, Hasnain Malik, Tellimer, Robert Mugabe Organizations: Service, Zimbabwe, Business, of America, BBC, New Development Bank, International Monetary Fund Locations: Zimbabwe, Zimbabwe's

☆ Tensions With Iran Add to Pakistan's Economic Challenges
▼ + stars: | 2024-01-18 | by ( Jan. | At A.M. | ) www.usnews.com time to read: +3 min

Pakistan conducted strikes inside Iran, targeting separatist Baloch militants two days after Tehran said it had attacked the bases of another group within Pakistani territory. It is undergoing a tough $3 billion International Monetary Fund (IMF) bailout programme that pulled it from the brink of default last summer. Pakistan's international bonds fell after its foreign ministry said it conducted strikes inside Iran on Thursday, two days after Tehran attacked the bases of another group within Pakistani territory. Earlier in the day, Pakistan's benchmark share index fell 1.6% after Pakistan said it conducted strikes inside Iran, before recovering some ground. Pakistan's economic ties with Iran, while not huge, are important for Islamabad as it struggles to supply its western- most regions in Balochistan with critical commodities, including fuel and electricity.

Persons: Aneel Salman, Salman, Pakistan's, Hasnain Malik, Ariba Shahid, Karin Strohecker, Amanda Cooper, Bernadette Baum Organizations: Baloch, Monetary Fund, Liquified Petroleum Gas, Islamabad Policy Research Institute, Pipeline Locations: KARACHI, LONDON, Pakistan, Iran, Tehran, Tradeweb, Islamabad, Balochistan, Afghanistan, Russia, India, Karachi, London

Some investors and economic analysts are sceptical that expansion will lead to increased foreign direct investment (FDI) within the bloc. Still, BRICS leaders and other investors touted the increased economic heft from the expansion. Increasing use of national currencies to reduce U.S. dollar dependence was another goal BRICS leaders discussed at the summit in Johannesburg. And with oil producer heavyweights among the newcomers, investors said this would feed speculation that Saudi Arabia might increasingly switch to non-dollar-denominated currencies for oil trade. "The short-term consequences could be seen in oil," said Kaan Nazli, a portfolio manager at asset manager Neuberger Berman in London.

Persons: Brazil Luiz Inacio Lula da Silva, China Xi, Cyril Ramaphosa, India Narendra Modi, Sergei Lavrov, Viktor Szabo, Li Kexin, Ola El, Chris Turner, Jakob Ekholdt Christensen, Hasnain Malik, abrdn's Szabo, Kaan Nazli, Neuberger Berman, Rachel Savage, Karin Strohecker, Bansari Mayur, Marc Jones, Jorgelina, Emelia Sithole Organizations: Russia's, Iran, United Arab Emirates, abrdn, Emerging Markets, ING, Reuters Graphics, China, International Monetary Fund, Thomson Locations: China, India, Sandton, Saudi Arabia, UAE, Iran, JOHANNESBURG, LONDON, Argentina, Brazil, Russia, South Africa, Ethiopia, Egypt, Johannesburg, United States, Saudi, London, Van Eck, New York, Copenhagen, Dubai, Bangalore, Rosario

☆ TRYing times: The slide and fall of the Turkish lira
▼ + stars: | 2023-06-07 | by ( Marc Jones | ) www.reuters.com time to read: +5 min

The central bank is however widely expected to get a new head in the coming days. Turkey's economy is no stranger to boom-and-bust cycles, oscillating between double-digit growth and contraction rates in recent years. 3/INFLATION PALPITATIONSA tumbling lira will fan fears over a fresh spike in inflation in the country which only last year saw it top 80%. "It's just so inevitable," Abrdn's head of local currency emerging market debt, Kieren Curtis, said referring to the lira's slump this week. He did add however that the compensation would be paid to depositors in lira rather than dollars or euros and that bill would be split between the Treasury and Central Bank.

Persons: Goldman Sachs, Ulrich Leuchtmann, Hasnain Malik, Erdogan, Tellimer's Malik, Kieren Curtis, Frank Gill, Tayyip Erdogan's, Karin Strohecker, David Evans Organizations: Wall, JPMorgan, FX, Reuters Graphics Reuters, International Monetary Fund, P Global, Treasury, Central Bank, Reuters, Thomson Locations: Ankara, Turkey, Commerzbank, Frankfurt, Tellimer

☆ Turkish lira teeters near record low as Erdogan secures victory
▼ + stars: | 2023-05-29 | by ( ) www.reuters.com time to read: +3 min

[1/2] A U.S. one dollar banknote is seen next to Turkish lira banknotes in this illustration taken in Istanbul, Turkey November 23, 2021. REUTERS/Murad Sezer/IllustrationLONDON, May 29 (Reuters) - Turkey's lira wobbled near record lows against the dollar as President Tayyip Erdogan secured victory in the country's presidential election on Sunday, extending his increasingly authoritarian rule into a third decade. The currency was at 20.05 to the dollar during Asian hours, just shy of the 20.06 record low hit on Friday. "Only the most optimistic would hope that Erdogan now feels sufficiently secure politically to revert to orthodox economic policy." "Erdogan is unlikely to embrace an outright economic orthodox approach," Wolfango Piccoli, co-president at advisory firm Teneo said in emailed comments.

☆ Turkish lira hits new record low after Erdogan election victory
▼ + stars: | 2023-05-29 | by ( ) edition.cnn.com time to read: +2 min

Turkey’s lira hit fresh record lows against the US dollar on Monday after President Recep Tayyip Erdogan secured victory in Sunday’s presidential election, extending his increasingly authoritarian rule into a third decade. The lira weakened to 20.065 to the dollar in early European trade, breaking through the previous record low touched on Friday. “Erdogan’s victory has seen further pressure on the Turkish lira,” said Benjamin Picton, senior macro strategist at Rabobank. Meanwhile, Turkish stocks enjoyed gains with the benchmark BIST-100 index up 3.5% and banking index rising more than 1%. The share of foreign asset managers holding Turkish stocks has dwindled in recent years and the market is chiefly driven by local investors.

☆ Turkey stocks rally, lira slips to record low after Erdogan victory
▼ + stars: | 2023-05-29 | by ( ) www.reuters.com time to read: +7 min

The nation is grappling with a cost of living crisis, a plunging currency and depleted foreign reserves. MARKET REACTION:LIRA: The Turkish currency touched a fresh record low of 20.105 on Monday. "In a scenario where Turkey ran out of foreign currency, lira’s value would likely collapse, inflation would explode and goods shortages could occur. A painful crisis affecting all assets is on the way, with very high inflation, very low interest rates and no net foreign reserves. Only the most optimistic would hope that Erdogan now feels sufficiently secure politically to revert to orthodox economic policy."

☆ ANALYST VIEW Markets tumble as Turkey faces runoff election after Erdogan leads first round
▼ + stars: | 2023-05-15 | by ( ) www.reuters.com time to read: +6 min

[1/2] Supporters of Turkish President Tayyip Erdogan wave flags outside the AK Party headquarters, in Ankara, Turkey May 15, 2023. DEBT: Five-year credit default swaps jumped over 100 basis points from Friday and dollar bonds fell more than 7 cents. STOCKS: Borsa Istanbul issued a market-wide circuit breaker after the benchmark index (.XU100) dropped 6.38% in pre-market trading and was last down 2.7%. PIOTR MATYS, SENIOR FOX ANALYST, IN TOUCH CAPITAL MARKETS, POLAND:"When/if President Erdogan is re-elected, the lira should be trading far more freely. CLEMENS GRAFE AND BASAK EDIZGIL, GOLDMAN SACHS, LONDON:"The (rates and CDS) market dynamics post the initial move will be dependent on the FX market.

☆ Turkey's lira slides, credit default swaps spike after election
▼ + stars: | 2023-05-14 | by ( ) www.reuters.com time to read: +2 min

It was on track for its worst trading session since early November. The five-year Turkey credit default swap spread TRGV5YUSAC=MG jumped 105 basis points (bps) from Friday's levels to 597 bps, according to S&P Global Market Intelligence, the highest since November 2022. Analysts expect the lira to slump in the wake of the elections following years of economic imbalances and unorthodox monetary policy. JPMorgan (JPM.N) forecast the lira could soften to levels of 24-25 to the dollar. The lira, which is prone to sharp swings before regular trading hours, has weakened 5% since the start of the year.

Violent clashes between supporters of Imran Khan and police broke out across the country after Pakistan's anti-corruption agency arrested the former prime minister on Tuesday. Pakistan's rupee has lost nearly 50% over the past 12 months. JPMorgan analyst Milo Gunasinghe said little relief from political uncertainty was in sight while the IMF programme remained stalled. "It is usually up to the country to present a credible plan of policies and financing that, in the face of political uncertainty, will credibly address the members’ balance of payment problems." The armed forces remain Pakistan's most powerful institution, having ruled directly for close to half the country's 75-year history through three coups.

The government declared a "level 4 alarm", calling for international assistance, and a three-month state of emergency in the most affected provinces. 'BLACK SWAN'Reconstruction costs are likely to run to many billions of dollars, straining an economy already hit by 58% inflation. The six-party opposition said only that the government should work "without discrimination" to address the disaster that hit regions including Kurdish communities and Syrian refugees. But Ugur Poyraz, Secretary General of centre-right nationalist IYI Party, said he had toured severely hit areas and as of Tuesday morning seen no sign of emergency rescue workers. "The response of Erdogan's government to this natural disaster might shape the attitude of the floating voter but the loyalties of most voters are already determined."

London CNN —The two biggest economies in South America are starting talks to create a common currency. At a press conference in Buenos Aires, he said establishing a common currency for trade would reduce reliance on the US dollar, whose sharp ascent last year was painful for countries around the world. Talk of creating a common currency has periodically cropped up since its founding in 1991. Still, investors are doubtful efforts to create a common currency in the region will gain much traction. “Brazil and Argentina are a long way away from the convergence in economic policy and performance required to launch [a] monetary union,” he said.

☆ A South American currency union? Don't hold your breath
▼ + stars: | 2023-01-23 | by ( Rodrigo Campos | ) www.reuters.com time to read: +4 min

That came after the leaders had touted a "common South American currency" on Sunday and officials told the Financial Times the tender could even be called the "sur" and eventually look to bring in other countries around South America. "It has failed to achieve simpler integration goals than that of a common currency." He called the idea of a currency union a "fantasy." Currency union talk was just a distraction, she said. Todd Martinez, a director at Fitch Ratings' sovereigns group focused on Latin America, said the two countries appeared to be unlikely partners to form a successful currency union, given their diverging economies.

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