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from Breakingviews:

Dollar set to take pound’s strong currency title

By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Sterling emerged as the currency market strongman over the past year because investors grew increasingly confident the UK would be the first big economy to raise interest rates. The dollar now looks set to wrest the title from the pound.

Better economic news has spurred investors to marginally bring forward expectations of when American rates will rise. Interest rate futures are now pricing in a quarter-point Federal Reserve tightening by the middle of next year, a month or two sooner than was anticipated at the end of May. Tiny adjustments have also been seen beyond mid-2015.

Something similar occurred in Britain in the past year. By now, expectations that UK rates will rise around the turn of the year are too old hat to lift the pound, which rose to nearly $1.72 in July, its highest in almost six years. In the United States, though, such shifts in rate views are more of a novelty. They could boost the dollar, even if comments from the Federal Reserve still suggest caution.

from Breakingviews:

Rouble hard to defend against Putin’s attacks

By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Vladimir Putin isn’t waiting for the European Union’s sanctions on Russia and is already inflicting serious damage on the nation’s economy. The Russian president’s move on Crimea has sent Moscow stock markets down by 18 percent since the beginning of March, and the rouble has fallen almost 2 percent in the same period, and 12 percent since January, even with the Central Bank of Russia dipping into its $500 billion-odd worth of reserves to defend the currency. Yields on 10-year Russian government bonds now stand at 9.42 percent, up 1 percentage point since the events in Crimea.

from MacroScope:

China at a crossroads on yuan internationalization project

As China marks the third anniversary of the first ever bond sale by a foreign company denominated in renminbi, questions are rife on what lies next for the offshore yuan market.

Since hamburger chain McDonalds sold $29 million of bonds on a summer evening just over three years ago, China’s yuan internationalization project has notched up impressive milestones.More than 12 percent of China’s trade is now denominated in yuan from less than 1 percent three years ago, Hong Kong – the vanguard of the offshore yuan movement – has more than one trillion yuan of assets in bank deposits and bonds and central banks from Nigeria to Australia have added a slice of yuan to their foreign exchange reserves.

from Breakingviews:

QE-lenient world gives Vietnam financial pardon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Wayne Arnold

Investors can’t stay mad at Vietnam. Even after a downgrade last month by rating agency Moody’s, they’re willing to lend Hanoi dollars for less. Rising exports have helped restore reserves and avert a potential balance of payments crisis, while top officials have apologised for economic mismanagement. In a world awash with cash, however, investors are all too eager to forgive and forget.

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