European Stocks To Open Up On Global Optimism

LONDON (Dow Jones)--European shares are expected to open higher Monday, as investors show confidence about a global recovery following upbeat Japanese gross domestic product data. The third quarter Japanese GDP release showed the fastest rate of growth since the first quarter of 2007, said Gareth Berry at UBS, and 'our economists note that the risk of Japan slipping into a double-dip recession early next year has receded significantly." Consequently, Ben Potter, market analyst at IG Markets, expected London's FTSE 100 index to open 22 points higher at 5318, Frankfurt's DAX 23 points higher at 5710, and the CAC-40 index in Paris 10 points higher at 3816. As far as the European economic calendar is concerned, euro-zone harmonized CPI is due at 1000 GMT. However, U.S. retail sales for October, at 1330 GMT, are likely to take center stage, with the market expecting a strong uptick, said Potter. "Failure to deliver here is going to heap pressure on Wall Street, and although the Standard & Poor's break above 1100 is increasingly being portrayed as having the potential to determine that this is no bear market rally, anything that suggests consumer confidence is taking a hit as we approach the holiday shopping season could initiate a wave of profit taking in the U.S. - the impact of which would doubtless be felt on markets across the globe," said Potter. On Wall Street Friday, stocks climbed amid some better-than-expected earnings reports, with Walt Disney propelling the Dow Jones Industrial Average higher and retailer J.C. Penney getting a boost from investors. The gains in the stock market came despite reports showing a decline in U.S. consumer sentiment in November and a widening of the trade deficit in September. The Dow Jones Industrial Average rose 73 points, or 0.7%, to 10270,47, up 2.5% for the week. The Nasdaq added 18.86, or 0.89%, 2167.88, up 2.6% for the week. And the Standard & Poor's 500 index rose 6.24, or 0.6%, to 1093.48, up 2.3% for the week. A strong session in the U.S. supported Asian shares, which traded mostly higher Monday with gold stocks leading in Sydney as the precious metal hit another record high, but chatter about potential capital raisings in Tokyo limited gains in that market. Japan's Nikkei 225 closed just 0.2% higher, but China's Shanghai Composite Index advanced 2.7% and Australia's S&P/ASX 200 index closed 1.0% higher. Hong Kong's Hang Seng Index was last seen 1.8% higher. In the currency markets, the euro gained ground against the dollar, as traders bought high-risk currencies amid gretaer confidence about the recovery of the world's economy. At 0725 GMT, the euro stood at $1.4986, around half a U.S. cent higher compared with late Friday in New York, while sterling stood at $1.6738, from around $1.6714. The dollar was at Y89.56, from Y89.65. The December front-month Nymex crude contract was $1.03 higher at $77.38 a barrel, after slipping 59 cents Friday in New York, supported by a weaker dollar against the euro and stronger Asian stocks. Spot gold was trading at $1,131.45 a Troy ounce, up around $11 from the New York close, a fresh record high.

BSP intervenes in forex market

MANILA, Philippines--The Bangko Sentral ng Pilipinas (BSP) has been intervening in the foreign exchange market in the past few days to prevent a sharp appreciation of the peso, making sure the increase in consumption is maintained to help prop up the economy.
This was according to market sources, who said that without the BSP intervention, the peso could have been much stronger than its closing values since last week.“Yes, the BSP has been intervening in the trading,” said one trader who asked not to be named.A market analyst, who also talked on condition of anonymity, said the central bank was avoiding a sharp appreciation of the peso to encourage households dependent on remittances from family members working overseas to spend more.“One-third of spending by Filipino households is supported by remittances. A weaker exchange rate will be beneficial to OFW families because this will increase their spending power,” the analyst said.Because of the lingering effects of the global turmoil, the Philippine economy needed to prop up consumption. One way to do so, he said, was to avoid having an exchange rate that would discourage families of overseas Filipino workers from spending.The peso on Tuesday closed at 46.475 against the dollar, up 16 centavos from the previous day’s finish of 46.63.The peso last week touched 46.46 against the greenback, its highest level for the year, on the back of rising dollar inflows.The BSP said the dollar inflows were in the form of foreign portfolio investments, which have started to increase following reports that the global economy was starting to recover from the worst of the crisis.BSP Governor Amando Tetangco Jr. said the peso might continue to strengthen due to remittances inflows, which continued to grow even at the peak of the global crisis.“Investors are regaining their risk appetite because of talks about recovery, and emerging markets like the Philippines will benefit from higher investment inflows,” Tetangco said.The BSP chief said the Philippines was experiencing rising foreign exchange inflows as proven by the appreciation of the local currency.
Monetary officials, however, would not admit whether the BSP actually intervened in the foreign exchange market yesterday. Nonetheless, they said it was the BSP’s policy to allow a market-determined exchange rate. But it will intervene in the market to avoid sharp and sudden appreciation or depreciation of the local currency.

Dollar Slips Against Major Rivals In Asian Trading

The dollar slipped against major rivals in Asian trading Monday, pressured by stepped-up rhetoric from China, better-than-expected Japanese growth data and rising gold futures. Gold futures looked set to extend their gains from last week, as further weakness in the U.S. dollar helped fuel safe-haven buying. Gold is traded in dollars, so a weaker dollar makes it cheaper for investors holding other currencies. Therefore, a move in one often fuels an inverse move in the other. The dollar was also under pressure a day after China's chief banking regulator criticized loose U.S. monetary policy as leading to increased speculation. The yen, meanwhile, got a lift from better-than-expected Japanese gross domestic product data. GDP rose 1.2% in the quarter from the April-June period, or 4.8% on an annualized basis. Economists polled by Dow Jones Newswires had expected a 0.6% on-quarter increase and an annualized increase of 2.2% in the latest period. The dollar bought 89.54 yen, down from 89.72 yen in late North American trading Friday. The euro bought $1.4978, up from $1.4903 late Friday.

Hit a new historic high of $43.2 billion

MANILA, Philippines - The country has become more liquid to meet its foreign currency-denominated requirements such as imports and maturing debts as its gross international reserves hit a new historic high of $43.2 billion in October.The reserves as of October was up from the end-September level of $42.5 billion. It was also higher than the $35.95 billion in October last year.The GIR is the total foreign-currency reserves and gold holdings kept and managed by the central bank. It determines a country’s ability to engage in commercial transactions with the rest of the world.Monetary officials said the country’s rising external liquidity was proof that it was less affected by the global economic turmoil.The foreign exchange buffer of the country is largely boosted by remittances coming from Filipinos working abroad, officials said. The sustained growth in remittances was making up for the drag in the GIR caused by dwindling exports, which turned anemic this year given the weak consumer demand worldwide caused by the global economic slowdown.The Bangko Sentral ng Pilipinas said that for the month of October, the GIR was also boosted by inflows from the sale by the national government of $1 billion in bonds.The GIR in October was also boosted by the increase in the price of gold in the world market. Of the reserves, $5.27 billion were accounted for by gold holdings.According to the BSP, the latest amount of foreign exchange reserves was enough to cover for eight months’ worth of imports. This was also nine times the country’s short-term external debt based on original maturity and four times based on residual maturity.
Debts computed based on residual maturity are those with original maturities of one year or less, and those that have medium- to long-term tenors but are about to fall due within the next 12 months.Net international reserves, which is the GIR less debts to be paid within a year, amounted to $43.1 billion as of end-OctoberMonetary officials said that given the country’s comfortable external liquidity position, it need not borrow abroad just to increase the GIR.Emerging economies were earlier encouraged by the International Monetary Fund to tap foreign borrowings if they needed to beef up their external liquidity positions.Countries heavily reliant on exports and do not receive as much remittance inflows as the Philippines could tap the international capital market to boost their GIRs.

Chinese yuans timeline

U.S. President Barack Obama has promised to raise the issue of the yuan's exchange rate when he visits China from Nov. 15-18, putting the spotlight on a major bone of contention which has the potential to shake currency markets and diplomatic ties.For a factbox on Obama's Asian itinerary see For a Q+A on what is at stake in the U.S.-China yuan tussle see for recent comments on the yuan by U.S., European and Chinese officials, see For Reuters columns on the yuan seeAs China's economy has regained much of its pre-crisis strength, debate over the appropriate exchange rate for the yuan, or remninbi is simmering again among policymakers and traders.Paired with voracious debt-financed spending by U.S. consumers, the competitive rate of the yuan has been pinpointed as one of the main causes of the imbalances in trade and investment that ushered in the global financial crisis. Here is a timeline of how China's currency has developed."people's currency" is issued as the People's Bank of China (PBOC) is founded. It circulates as civil war rages between Mao Zedong's Communist rebels and the ruling Kuomintang Chinese Nationalist Party.Oct. 1, 1949: The victorious Mao founds the People's Republic of China. Yuan established as sole unified legal currency, as communists seek to end the hyperinflation that has plagued China.March 1, 1955: PBOC issues second RMB series.1955-1971: Exchange rate set at 2.46 yuan to the dollar until 1971, the year China takes its seat at the United Nations.1962: Third series of RMB issued.1960s-1970s: Yuan stable in terms of inflation, as government sets wages and prices in centrally planned economy.1972-79: RMB gradually revalues to 1.50 yuan to the dollar.1978: Two years after Mao's death, Paramount leader Deng Xiaoping, architect of the "socialist market economy" that supersedes the centrally planned economy, begins reforms.1979: As part of China's opening up, government begins foreign exchange retention quota system to encourage exports, allowing firms to retain a percentage of foreign exchange claims.Jan. 1981: First round of yuan devaluation. State Council introduces "internal settlement rate" of 2.80 yuan/dollar. The more realistic exchange rate is based on China's average export cost per dollar plus a 10 percent margin.

U.S. dollar focused in Asia

SYDNEY - A rare rally in the U.S. dollar was the focus in Asia Friday as investors wondered if President Barack Obama's week-long visit to the region would generate pressure for some countries to let their currencies rise.The bounce in the long-suffering U.S. dollar added to profit-taking on commodities like gold and oil, while weakness in shares across Asia supported the dollar as a safe-haven trade.Obama kicks off his first official tour of Asia by meeting Japanese Prime Minister Yukio Hatoyama on Friday, then goes on to Singapore, China and South Korea.High on the agenda will be U.S. calls for Asian countries to do more to stimulate domestic demand instead of relying on exports to America. That would likely require much of Asia, and China in particular, to let their currencies appreciate.But there's an inherent contradiction in the U.S. stance.Treasury Secretary Timothy Geithner often states his desire to see a strong dollar, yet at the same time wants Asian exporters to let their currencies gain ground against the dollar.Leaders of Asia Pacific Economic Cooperation seemed to give ground this week by backing "market-oriented" exchange rates. Yet many of the same countries were spotted intervening to buy the dollar to stop an export-damaging rise in their own currencies.Traders said this burst of buying caught many speculators short and was a major reason the U.S. dollar bounced so far.The euro had pulled back to $1.4858, from Thursday's peak around $1.5048, while the dollar reached 90.30 yen from the week's 89.26 trough.Against a basket of currencies the dollar was up at 75.596 and off 15-mth lows of 74.774, though it remains within a downtrend channel that stretches back to May.The dollar's rise added to pressure on oil, already burdened by a surprisingly large increase in U.S. crude inventories. Nymex crude for December delivery was off 38 cents at $76.56, after shedding 3 percent on Thursday.Likewise, spot gold was dragged down to $1,103.60 per ounce.Most share markets in Asia tracked Thursday's fall in U.S. stocks, which snapped a six-day winning streak.The Dow Jones average dropped 93.79 points, or 0.91 percent, on Thursday to 10,197.47, while the Standard & Poor's 500 Index lost 11.27 points, or 1.03 percent, to 1,087.24.The MSCI index of Asia Pacific stocks outside Japan followed on Friday to be off 0.9 percent at 407.24. Some blamed concerns about U.S. shoppers.On Thursday, Wal-Mart Stores Inc forecast earnings during the key holiday quarter could miss Wall Street estimates as its customers face rising unemployment."It is inevitable for exporters in Korea and China to be hit as U.S. retailers are unlikely to enjoy the holiday shopping season," said Choo Hee-yeop, a strategist at Korea Investment & Securities.

Market capitalisation

SINGAPORE, Nov 13- The chairman of the Industrial & Commercial Bank of China, the world's largest by market capitalisation, said a stronger yuan would not be conducive to the global recovery, and defended the wisdom of a rash of lending by Chinese banks this year.China's central bank earlier this week signalled it would consider shifting from an effective peg to the U.S. dollar, which has been in place since mid-2008. The People's Bank of China said it would consider major currencies, and not just the dollar, when guiding the exchange rate. "I personally believe that an appreciation of the renminbi is is not conducive to smooth global economic recovery at this moment," Jiang Jianqing told reporters during the Asia Pacific Economic Cooperation forum on Friday, referring to the "people's money" or yuan."The global economy is still very unstable, off-balance. So stability in currencies and consistency in currency policies is very important, and should not be changed abruptly."ICBC and other Chinese banks have sharply increased lending this year in line with the Chinese government's stimulus policies to stave off the financial crisis. ICBC's loans could double this year compared with last, Jiang said, although he noted loan growth was slowing from earlier in 2009.Jiang said infrastucture investments enabled by the stimulus could lay the foundation for China's growth over the next 10 years, shrugging off concerns by many analysts that the stimulus measures have worsened already severe overcapacity in some sectors.Despite the rash of new loans, Jiang said he expected the non-performing loan situation in China's banking sector to improve next year, as Chinese firms climb out of the global economic crisis."The probability that NPLs in the Chinese banking industry will increase is very low. Last year, and this year, were the most difficult for the Chinese financial sector and corporations," Jiang said."Since the beginning of the second half of this year, we've seen a fast recovery for corporations. Last year and this year, the NPL ratio, as well as the absolute amount, was falling. So next year, with a more positive outlook for the economy, we don't expect" to see more NPLs.
A sharp rise in global and Chinese markets this year should still be considered a rebound, and not yet a bubble, since markets were oversold last year, Jiang said, but added that policy makers should be "very careful" about inflation.ICBC has applied to open branches in Malaysia as part of its expansion into Southeast Asia, and expects to complete its purchase of Thailand's ACL Bank ACL.BK by early next year, Jiang said.In September, ICBC bought a 19.26 percent stake in Thailand's ACL Bank and said it planned to make an offer for ACL's remaining shares in a deal worth around $545 million. It is considering expansion in Europe, but has not yet settled on the right model to do so.