By the Blouin News Business staff

Monthly Archives: December 2012

Venezuela’s now-you-see-it-now-you-don’t devaluation

by in Americas.
100 bolivar Venezuelan currency notes

 

100 bolivar notes. AFP/Getty Images

The widening gap between the official and black-market rates for Venezuela’s currency is heightening expectations of another devaluation of the bolivar. It is two years since the last one. Since then inflation and an exorbitantly high fiscal deficit as a result of extensive public spending in an election year have pushed the rate that  matters most to the import-dependent country to unsustainable heights. The gap between the…

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Egypt’s currency takes a pounding

by in Middle East.
Protesters in Cairo's landmark Tahrir Square on November 18, 2011
Protestors in Cairo. AFP/Getty Images/Khaled Desouki

A first read on Egypt’s introduction foreign-currency auctions at the end of last week is that the government is trying to manage an orderly devaluation of the Egyptian pound through a two-tier exchange rate. The currency’s fall to a record low of 6.30 to the U.S. dollar on Sunday suggests a measure of success, though it is success only in the sense of achieving the…

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Morales scares off more potential partners

by in Americas.
Bolivian President Evo Morales
Bolivian President Evo Morales. AFP/Getty Images/LLUIS GENE

Bolivia’s left-wing president Evo Morales has long said that when it comes to foreign investors, he wants partners not owners. He does, though, want to ensue that Bolivia is the owner when it comes to strategic industries. His latest nationalization of two power distributors, Spanish-owned Empresa de Electricidad de La Paz, or Electropaz, and Empresa de Luz y Fuerza de Oruro, or Elfeo, follows…

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Euro zone government bonds ring in the New Year with CACs

by in Europe.
New Year Fireworks, Berlin
Fireworks explode on New Year’s Eve on January 1, 2012 in Berlin, Germany. Getty Images/Andreas Rentz

From the New Year, all newly issued euro zone sovereign debt will include a legal provision that can force investors to accept losses in a crisis. Collective Action Clauses (CACs) were originally intended to give legal clout to investors from the developed world who needed to push through restructuring of the bonds of developing counties’…

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China’s Troubled Solar Panel Makers Get A New Helping Hand

by in Asia-Pacific.
100MW photovoltaic on-grid power project in Dunhuang, Gansu Province. Getty Images AsiaPac/Feng Li
100MW photovoltaic on-grid power project in Dunhuang, Gansu Province. Getty Images AsiaPac/Feng Li

China’s solar panel industry was meant to be a shining success. Trillions of yuan of government subsidies and cheap loans were poured in to what was designated as a strategic emerging industry. It was green, technologically advanced and would help China meet both the country’s growing power demands and its people’s growing expectations of a cleaner environment. It had…

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Japan’s new economics team

by in Asia-Pacific.
New Japanese Prime Minister Abe and his cabinet ministers pose for a photo session after their first cabinet meeting in Tokyo.
New Japanese Prime Minister Shinzo Abe (front row, center) and his cabinet

New Japanese prime minister Shinzo Abe’s economics team are all close allies in his campaign to beat deflation and tame a strong yen with hyper-expansionary monetary policy and large-scale public works spending. Like Abe, they are mostly scions of some of the Liberal Democratic Party’s (LDP’s) most established political families. They include:
Taro Aso, finance minister, financial services minister and…

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Egypt ratings downgrade brings devaluation nearer

by in Middle East.
Continuing political strife in Egypt threatens a further credit downgrading.
Protest rally in Alexandria. AFP/Getty Images/MAHMUD HAMS

Standard & Poor’s cut of Egypt’s long-term credit rating to ‘B-‘ from ‘B’ bodes ill for the country’s ability to finalize a $4.8 billion IMF loan–one purpose of which was to forestall a ratings downgrade–and increases the likelihood of a devaluation in the new year.
The aid is needed to prop up an economy that has seen tourists and foreign investors desert the country since…

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Abe gives Shirakawa his marching orders

by in Asia-Pacific.
Japan's conservative Liberal Democratic Party's (LDP) leader and next Prime Minister Shinzo Abe points during a news conference at the LDP headquarters in Tokyo December 17, 2012.
Japan’s next prime minister Shinzo Abe

It is scarcely a secret that Shinzo Abe, who will become Japan’s prime minister this week, hasn’t much time for Masaaki Shirakawa, governor of the Bank of Japan. Abe has already said he will replace Shirakawa when the central banker’s term of office expires in April. In the meantime he is threatening to resort to law to get Shirakawa to adopt the 2% inflation target…

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Private investment finds Brazil less welcoming

by in Americas.
Brazilian President Dilma Rousseff seen on November 19, 2012.
Brazilian President Dilma Rousseff. AFP PHOTO / DOMINIQUE FAGET

Brazil’s economy is sputtering. Two years ago it was one of the fastest growing in the world. This year, GDP growth will likely be barely 1%. A scattershot of measures from an increasingly interventionist government to stimulate growth is stoking inflation more than output. Third quarter GDP growth, at 0.6% quarter-on-quarter, was well below expectations while prices are rising at their fastest…

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Derivatives trading is a young company’s game

by in Europe, U.S..
Traders work the floor at the New York Stock Exchange in New York.
Traders work the floor at the New York Stock Exchange in New York December 20, 2012. REUTERS/Andrew Kelly

There is something symbolic to the changing nature of financial markets that it is a 12-year old operator of energy and commodities futures contracts that will end more than two centuries of independence of the icon of American stock markets, the New York Stock Exchange. IntercontinentalExchange (ICE) has agreed to buy NYSE Euronext…

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