Wednesday, May 30, 2018



Hazen:  Question:  Aren’t there some big meetings in Iraq & US today (U.N.)?? Any news on this?

Boxman:  it is ongoing at present...several speakers Peru, Kuwait Poland and others congratulate Iraq on success against Daesh, condemn the suicide bombers, wishing Iraq well on the peaceful election and transition..still in process..

DinarDiva1:  UN Security Council will hold a session on the situation concerning #Iraq on Wednesday, 30 May 2018, at 10:00 a.m. EST. SRSG for Iraq, Ján Kubiš, is expected to brief the session shortly after it commences. Live webcast: http://webtv.un.org

LeHouston:  And before we know it, Christmas will be here 

Frank26:  I PREFER TO SAY .................... AND BEFORE WE KNOW IT ................ THE RI WILL BE HERE......... WHY DO YOU PREFER TO SAY THAT FRANK26 ?

Samson:  Pressure on Hong Kong to Scrap Currency Peg

 29th May, 2018

Hong Kong is waging an intensifying battle against currency traders. Since April, the territory spent at least $9 billion defending its peg to the US dollar, and there is plenty more where that came from.

The city’s monetary authority is reminding speculators it has $434 billion more in firepower. Trumpeting the world’s largest per capita foreign exchange reserves is central banker-speak for “do not try us”, Nikkei reported.

But this is not another case of speculative traders like the financier George Soros in the 1990s betting against a currency peg. The pressure this time comes from economic logic. The peg is here to stay, a who’s who of Hong Kong experts assure the investment world. The 35-year-old link, pundits claim, is the linchpin of an economy often regarded as the world’s freest.

Yet as Hong Kong scuffles with short-sellers, is it fighting the wrong war? If only Chief Executive Carrie Lam and Norman Chan, who heads Hong Kong’s de facto central bank, spent as much time and resources addressing worsening inequality and social mobility.

The falling Hong Kong dollar is a distraction—more symptom than cause of the challenges bearing down on the territory. The currency is not sliding because investors lack faith in an economy growing more than 4%. Rather, Hong Kong is captive to its role linking China and the US.

In theory, the Hong Kong dollar should be surging. As the Federal Reserve ratchets up interest rates, the Hong Kong Monetary Authority is obliged to tighten in step. Its markets also are heavy recipients of cash from mainland investors moving wealth offshore
Even so, the currency is sliding because of a massive “carry trade”. Investors are borrowing cheaply in Hong Kong to buy higher-yielding assets in the US, where 10-year treasury yields are near 3%. That is turning the “freest” economy into the world’s biggest funhouse mirror, reflecting back the confusing tensions which economies face as Chinese and US monetary policies diverge. Washington is yanking away the punch bowl of cheap money; Beijing is still in refill mode.

  Grappling With the Monetary Crossfire

Good news for President Donald Trump’s America, as those inflows into the US support a stock rally on which his presidential legitimacy partly relies. It also helps America fund a giant $1.5 trillion tax cut. Not so much for Lam and Chan, who must grapple with the monetary crossfire.

All that defending, though, affords less time to alter Hong Kong’s worrisome trajectory. Its experience back in 1997 is relevant here for two reasons. One, that was the last time markets wagered seriously, during the Asian crisis, that Hong Kong might scrap the peg. Two, economic inequality has widened markedly since then. Twenty years after the handover back to China, charity Oxfam labels Hong Kong one of the most inequitable places on the planet.

China’s cash plays an outsized role in Hong Kong’s deteriorating “Gini coefficient,” a key income-gap metric. Its 0.54 reading is the highest in four decades, and the problem has intensified since ‘97. As mainland wealth pushed up property prices, local wages stagnated. That disconnect pushed living costs out of the reach of middle-class families and, increasingly, millennials.

In February, Hong Kong announced an $18 billion fiscal surplus, an amount double that spent defending the currency. So, Hong Kong surely has the resources to get its Gini coefficient below 0.4, the inequality level regarded as dangerous.

It is best, says Paul Yip, chair of population health at the University of Hong Kong, “to face the problems and respond to them in a timely manner and while we have the money”. That means making more affordable housing a government priority, along with wider social safety nets and more affordable health care and education.

Defending the Hong Kong dollar’s peg to the US currency takes away resources from spending for a better economic future.  LINK

Samson:  Moody's cuts Turkey's growth forecast to 2.5% in 2018

30th May, 2018

Moody's has revised its forecast for Turkish growth in 2018 to 2.5 percent from its previous forecast of 4 percent, while rising oil prices and a devaluation of the pound have negatively impacted overall growth in the second half of the year

Moody's also said in a statement on Wednesday that the recent announcement by Turkish President Recep Tayyip Erdogan on the control of monetary policy after the elections weakened the independence of the Central Bank of Turkey   LINK


Samson: Indonesia Ready to Trade Growth for Stability

 29th May, 2018

Indonesian Finance Minister Mulyani Indrawati said the government is willing to accept slower economic growth as a trade-off for stability.

“All of us are ready to implement any policies needed to protect Indonesia’s economy,” Indrawati told reporters on Monday in Jakarta. “So, if we have to make adjustments in the short run that will result in slightly lower growth, that’s a consequence that we will take,” Bloomberg reported.

Policymakers have been forced to shift focus to stability amid a rout in the currency even as the economy is still struggling to fire up. Almost all economists predict the central bank will raise interest rates in an early policy meeting on Wednesday, which would be the second increase in two weeks.

Indonesia’s economic growth is stuck at about 5%, well below the 7% targeted by President Joko Widodo. The government would accelerate reforms to support growth and would continue working with Bank Indonesia on a coordinated policy response to the current market turmoil, Indrawati said.

“We won’t hesitate to make well-timed responses to maintain the stability of the financial sector,” she said.

Indonesia’s new central bank governor has set the stage for a second interest rate increase in two weeks, as he wastes little time in acting against a currency rout.

A day after Governor Perry Warjiyo was sworn into office, Bank Indonesia announced the monetary policy board will meet this week, about a month before its next regular monthly scheduled one. The move helped to boost the currency 1% against the dollar on Monday, the best performer in Asia, and pare back its decline for the year to 3%.

Warjiyo has pledged to act early and be ahead of the curve when it comes to policy, a stance he reiterated on Monday. He told reporters in Jakarta the out-of-cycle meeting is a pre-emptive step ahead of the Federal Reserve’s next policy decision on June 14.

That would give Bank Indonesia the chance to adjust policy before the Fed’s expected tightening move. Indonesia’s regular monthly meeting was scheduled for two weeks after the Fed decision.

Like central banks in emerging markets from Argentina to Turkey, Bank Indonesia is stepping up its action to stem a global rout triggered by rising US interest rates and a stronger dollar.   LINK

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