Breakingviews

Swiss caught in the wake of massive FX currents

By Edward Hadas
March 19, 2015

Exposure to the European economy has helped Switzerland. The euro has not. The failure of the franc’s peg to the single currency has cut into expected growth, and leaves the central bank searching for a new approach. The lesson: in currency wars, the little guys usually lose.

Turkey’s central bank is in a very tough spot

By Edward Hadas
March 9, 2015

Rate-setters are under pressure from President Erdogan to ease, despite a big trade deficit, high inflation and a weakening lira. The central bank is trying to square the circle, including by cutting forex deposit rates. It could all get much worse, if Erdogan pushes too hard.

FX fines are wake-up call on self-policing

November 12, 2014

The $3.4 bln settlement for five banks works out on average at 20 pct higher than Libor – because the firms failed to mend their ways. Regulators are seeking yet tougher internal controls. Banks have a last chance to show they can treat clients fairly.

UBS’ legal pain is beginning to look manageable

October 28, 2014

The Swiss bank is still paying for past sins, with a 12 month extension of a U.S. non-prosecution deal and a hefty $1.9 bln addition to legal reserves in the third quarter. But the underlying businesses are now prospering. Investors can finally eye decent returns.

Russian central bank intervention is a dead end

October 8, 2014

The central bank of Russia is buying roubles on the market, but the exchange rate keeps sinking. The economy has deep structural flaws, worsened by Putin’s aggressive foreign policy. There are many reasons to take capital out of Russia. For the currency, the only way is down.

Sterling fall shows rational alarm over Scotland

By Edward Hadas
September 8, 2014

The poll lead for Scottish independence may be unreliable, but the decline of the pound – now down 6 pct since July – prices in the realistic risk of trouble. A UK breakup would be fraught, the fiscal and economic damage significant, and the loss of European status definitive.

Euro has further to fall

September 5, 2014

The single currency has dropped sharply since the ECB eased policy this week. The central bank now openly hankers for a weaker euro to boost inflation, and is doing all it can to bring this about. Traders sometimes fight central bankers. This time they look happy to go along.

Review: A world of reasons for the dollar to crash

March 21, 2014

In “The Death of Money” James Rickards sees a multitude of ways for the world monetary system to collapse. The greenback has dangerous adversaries in China and al Qaeda. But he lets the Fed and budget deficits off lightly. And some of his solutions would cause yet more havoc.

Whole FX business belongs in the dock

By Edward Hadas
February 18, 2014

Some traders may have committed malpractice in the gigantic foreign exchange market, but the currency business itself has the hallmarks of an economic crime. It is much too big to serve any useful purpose. Its volatility is destabilising. And FX hedges are mostly pointless.

Against the euro, the pound looks sound

April 5, 2012

Britain’s economy probably grew 0.5 percent in the first quarter. That’s a big improvement on Q4 - and a lot better than the euro zone. UK inflation is stubborn too, making further rounds of money printing less likely. It all bodes well for sterling against the euro.