Some CB dumped $ this past week. Somehow I suspect it was BOJ,
since Yen was too low. If so, it was not rats abandoning ship,
rather, it was peg maintenance. But if the dumping continues
this coming week as well, things could get very interesting
-g-
So far, I've seen them talking, but I have not seen them
dumping. Until this past week, that is -ggg- Dollar rallied,
Yen fell further. If nothing else, this requires more dumping
of treasuries by BOJ to support the peg. They used to want
Yen between 120Y/$ and 105Y/$. They get what they want - Yen
was stopped dead at 105, and when it tried to go much above
120 on previous occasions.
A quote from latest Noland:
June 8 – Bloomberg (Jake Lee): “Hong Kong’s government and de-facto central bank ‘seriously’ considered scrapping the city’s currency link to the U.S. dollar during a financial crisis in 2002, former Financial Secretary Antony Leung said… Former Hong Kong Chief Executive Tung Chee-Hwa said ditching the peg was considered when ‘financial sharks’ were attacking the link in 2002, the Standard reported today…”
June 5 – Bloomberg (Matthew Brown): “The United Arab Emirates may be the next Middle Eastern country to stop pegging its exchange rate to the U.S. dollar, according to trading in currency forwards. The second-largest Arab economy may follow Syria and Kuwait, which both said in the past two weeks that they would dump the dollar peg to curb rising import costs and inflation. Middle East currencies have been dragged lower by declines in the dollar, pushing up the cost of imports from Europe and Asia.” |
