China’s Central Bank to Lead Real-World Pilot of Digital Yuan: Report By Cointelegraph


© Reuters. China’s Central Bank to Lead Real-World Pilot of Digital Yuan: Report

China is at last planning to conduct the first real-world test of its central bank digital currency (CBDC), fresh reports claim.

According to local news outlet Caijing on Dec. 9, the initial pilot for the CBDC is set for the city of Shenzhen before the end of 2019, and may possibly include the city of Suzhou.

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central bank adviser By Reuters



BEIJING (Reuters) – China’s potential economic growth will be below 6% over the next five years, an adviser to China’s central bank said on Saturday.

The economy could grow between 5% and 6% from 2020 to 2025, Liu Shijin, a policy adviser to the People’s Bank of China, said at a conference in Beijing, according to an article he posted on social media.

China’s monetary policy is already quite loose, and attempting to stimulate the economy to grow faster than its potential could cause it to fall off a cliff, said Liu.

China’s third-quarter economic growth slowed more than expected to 6% year-on-year, marking its weakest pace in almost three decades, and at the bottom end of the government’s full-year target range of 6.0%-6.5%.

Despite the growing strains on the economy caused by slowing domestic demand and a trade war with the United States, Beijing remains reluctant to implement major stimulus for fear of heightening financial risks given already high levels of debt.

China central bank governor Yi Gang reiterated in an article published last week that China will not resort to quantitative easing and is committed to maintaining a prudent monetary policy.

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Few gains for central Europe’s currencies in the coming year: Reuters poll By Reuters



By Jason Hovet and Miroslava Krufova

PRAGUE (Reuters) – Central Europe’s main currencies will struggle to appreciate in the next year, with the Hungarian forint seen sticking near record lows and only the Czech crown expected to eke out small gains, a Reuters poll showed on Thursday.

Slowing growth is a large factor taking the shine off the region’s currencies, which have already been battered much of the year by rising global risks like a hotter trade dispute between the United States and China, as well as Britain’s still unclear departure from the European Union.

While Central European economies have held up well so far, they are starting to show the effects of a slowdown in western trading partners, notably Europe’s main engine Germany.

Hungary’s forint () has also been hurt by the central bank’s loose monetary policy stance as its interest rates are the lowest in the region.

The currency has lost over 3% since the start of the year and hit a record low to the euro in November.

Most analysts in a Reuters poll predicted the forint would cling to these levels over the next 12 months, avoiding the same depreciation trend seen this year.

The median poll forecast showed the currency losing around 1.1% from Wednesday’s level to trade around 335 to the euro over the next 12 months.

“The currency which we are underweight on is the Hungarian forint…largely because we think the monetary policy is too loose for the deteriorating current account dynamics,” ING chief FX strategist Petr Krpata said.

For a graphic on Hungarian forint, click https://fingfx.thomsonreuters.com/gfx/mkt/12/9508/9420/Forint.png

Romania’s leu () was also forecast to drop 1.5% to 4.85 per euro due to concerns over deficits in the country.

The Polish zloty (), the region’s most liquid currency, was seen nudging 0.5% lower to 4.30 to the euro, unchanged from the 12-month outlook in a poll a month ago.

Caution is still seen around the fate of Swiss franc mortgage loans and their impact on the banking sector.

The zloty weakened last week after a Polish Supreme Court verdict that investors fear raises the risk that Swiss franc mortgage loans will be converted into the local currency on terms unfavorable to banks.

“Macro data continue to point to a weakening of activity,” Raiffeisen Bank wrote in a Dec. 3 FX outlook report.

“Another set of news regarding the CHF mortgage issue increased concerns about the negative impact on the banking sector… Given all of the above, EUR/PLN is likely to fluctuate above 4.30 in the near term.”

For a graphic on Polish zloty, click https://fingfx.thomsonreuters.com/gfx/mkt/12/9509/9421/Zloty.png

Natixis strategist Nordine Naam said the current economic backdrop was negative short term but that slow recovery in growth starting next year could also boost currencies later.

Analysts also said the Czech crown still stood out. It was forecast, though, to gain 0.5% to 25.43 per euro in the next 12 months.

The Czech central bank remains one of the few in Europe still debating whether interest rates should rise further to battle inflationary pressures.

“Given the carry advantage, being short euro-long crown should give positive returns,” said Krpata of ING, which has made the crown its top pick in the region.

For a graphic on Czech crown, click https://fingfx.thomsonreuters.com/gfx/mkt/12/9507/9419/Crown.png





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Lebanon central bank to take needed steps amid crisis: banking official By Reuters



BEIRUT (Reuters) – Lebanon’s central bank governor will take “necessary, temporary measures” to preserve the banking sector and depositor rights, the banking association head said on Friday.

Salim Sfeir, chairman of the Association of Banks in Lebanon (ABL) that represents the country’s banks, read a statement after a top-level meeting at the presidential palace as Lebanon grapples with the worst economic crisis in decades.

He did not give details on the steps and added without elaborating that Central Bank Governor Riad Salameh had also made “some suggestions that require legal provisions”.

“The central bank governor was assigned to take the necessary, temporary measures, in coordination with the banking association, to issue circulars,” Sfeir said after the meeting with President Michel Aoun, Salameh, and government officials.

“This is to preserve stability, confidence in the banking and monetary sector, as well as its safety, and depositors’ rights.”

In response to a question from reporters, he repeated previous remarks from officials that there will be no formal capital controls.

Lebanese banks have imposed new curbs on access to cash, fuelling depositor worries over their savings despite government assurances they are safe. The banks have tightened limits on withdrawing U.S. dollars and blocked nearly all transfers abroad amid worries about a capital flight and political gridlock over forming a new government.

Since protests erupted across Lebanon on Oct. 17, pressure has piled on the financial system. A hard currency crunch has deepened, with many importers unable to bring in goods, forcing up prices and heightening concerns of financial collapse.

In a Reuters interview this month, Sfeir described the new bank controls as “a fence to protect the system” until things return to normal.

Sfeir also noted on Friday that Lebanon had fulfilled its commitment and paid off a Eurobond of $1.5 billion that was due to mature on Thursday.

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Saudi central bank governor reiterates banking sector is very liquid By Reuters


© Reuters. Saudi central bank governor reiterates banking sector is very liquid

RIYADH (Reuters) – Saudi Arabia’s banking sector has a high level of liquidity, its central bank governor said on Sunday, as banks in the Gulf state offer leverage to Saudi investors for shares in Saudi Aramco’s approaching initial public offering.

“The Saudi banking sector enjoys very high level of liquidity compared to Basel requirements,” Ahmed al-Kholifey told a conference.

In September, the governor had said he did not expect Saudi Aramco’s planned listing to affect liquidity in the banking sector, as all indicators were healthy.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



China central bank cracks down on cryptocurrency trading in Shanghai By Reuters



SHANGHAI (Reuters) – China’s central bank launched on Friday a fresh crackdown on cryptocurrency trading in the financial hub of Shanghai, after Beijing’s promotion of blockchain technology reignited interest in virtual currencies.

The move came a day after financial regulators in Shenzhen launched a similar campaign, and as the People’s Bank of China (PBOC) is preparing to launch its own digital currency.

PBOC’s Shanghai headquarters said in a statement it would crack down on a resurgence of illegal activities around virtual currencies, and cautioned investors not to confuse such instruments with blockchain technology.

“The issuance, financing and trading of virtual currencies involve multiple risks,” PBOC said, vowing to uproot such activities.

Bitcoin’s price, which had dropped roughly 20% this month, extended its slide following the PBOC statement.

China launched a nationwide crackdown on cryptocurrencies in 2017, but interest in such currencies revived after Chinese President Xi Jinping said last month China should accelerate the development of blockchain technology, a digital ledger that forms the backbone of many cryptocurrencies such as bitcoin.

Xi’s remarks also sparked a rush into the shares of companies engaged in, or believed to be engaged in, blockchain or digital currency-related businesses.

PBOC said last week it had not issued any digital currencies nor authorized any asset trading platforms to trade such currencies.

PBOC’s Shanghai headquarters said it busted 13 platforms for initial coin offerings (ICOs) and 10 platforms for virtual currency trading during the previous crackdown in 2017.

The central bank added that it is still studying and testing its own digital currency.

PBOC is stepping up efforts to roll out its own digital currency, officially called Digital Currency Electronic Payment (DCEP), partly to fend off potential threats from Facebook’s proposed digital currency Libra.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Chile Central Bank Announces FX Swap Program as Peso Dives By Bloomberg



(Bloomberg) — Chile’s central bank will offer $4 billion of currency swaps after the peso weakened 6% in three days amid a wave of social unrest and investor concern about a new constitution.

The currency fell to a record low against the dollar this week, triggering a verbal intervention from the central bank on Tuesday. At the same time, the implied volatility in the peso spiked to the highest levels since 2006. The measures announced today will come into affect Thursday and continue until Jan. 9, the bank said in an e-mailed statement.

“I wouldn’t take this as something that will turn the market around,” said Alejandro Cuadrado, a currency strategist at BBVA (MC:) SA in New York. “It will accommodate any liquidity squeeze, but it’s not fighting the depreciation. I don’t think it’s a game-changer.”

Chile has been wracked by a wave of protests and riots since Oct. 18. The peso only edged lower at first before collapsing this week after the government on Sunday backed plans to rewrite the constitution, spooking traders concerned about extended uncertainty. President Sebastian Pinera in a speech to the nation last night failed to announce new measures or reassure the market.

“What it’s doing with the swaps is to increase the availability of foreign currency,” said Nathan Pincheira, an economist at Fynsa SA in Chile. “Whoever asks for the dollars will have to return them. It’s trying to relieve the short-term drought.”

The peso declined Wednesday after the government said yesterday that it would pull $1 billion from its sovereign wealth fund in the next few days and another $1.4 billion in early 2020. That money will end up being exchanged into pesos.

The swaps will provide liquidity in dollars without draining central bank reserves, since they will have to be repaid. Brazil’s central bank uses a similar system of swaps, which it either rolls over or allows to mature.

The central bank intervened in 2008 and 2011 to prevent the peso from strengthening, both times through programs of dollar buying. More recently in 2017, Mexico’s central bank offered a program of currency forwards to help prop up its peso.

On this occasion, strengthening the peso may counteract the bank’s monetary policy, which has an easing bias. On the other hand, a weaker peso tends to push prices higher.

(Adds analyst comment in the fourth paragraph)

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Thai central bank to lower growth outlook, still has scope to support economy By Reuters



By Orathai Sriring and Kitiphong Thaichareon

BANGKOK (Reuters) – Thailand’s central bank will lower its economic growth forecasts for this year and next, a deputy governor said on Wednesday, and still has monetary policy space for action to support the economy despite cutting its key interest rate to a record low.

Southeast Asia’s second-largest economy is not in a crisis, however, as the country’s economic fundamentals and banks remain strong, said Deputy Bank of Thailand Governor Mathee Supapongse.

The central bank will review its 2019 and 2020 economic growth forecasts – currently at 2.8% and 3.3%, respectively – at its next monetary policy meeting on Dec. 18.

“They will likely come down, but by how much will depend on latest economic data at that time,” Mathee told Reuters in an interview.

Thai exports have been hit by global trade tensions and the strength of the baht – Asia’s top performing currency this year – has further put pressure on the trade-reliant economy.

Last week, the BOT’s monetary policy committee (MPC) cut its policy rate by 25 basis points to 1.25%, a record low last seen during the global financial crisis.

“Monetary policy is data-dependent. Our rough forecasts suggested growth and inflation would be less than expected, so the committee thought monetary policy should be eased further,” Mathee said.

He added that the MPC had got “ahead of the curve” by acting before official third-quarter gross domestic product (GDP) data is released next Monday by the state planning agency.

Although July-September growth is expected to be lower than the BOT’s forecast, it should be higher than the second quarter’s 2.3% pace, which was the weakest in nearly five years, and there should be no quarter-on-quarter contraction, he said.

Last week’s rate cut, the second in three months, prompted commercial banks to lower borrowing costs, and Mathee said that should help the economy, purchasing power and inflation.

Although the policy rate is now at a record low of 1.25%, there is still room to help the economy if necessary, said Mathee, who is a member of the central bank’s policy committee.

“I think it’s not a limitation that we have reached the bottom already,” he said, adding that Thailand had no need to cut the key rate to zero, as other measures and fiscal policy were also helping.

The BOT is still concerned about the baht’s strength, although there is no evidence of speculation in the currency, he said.

The baht weakened after the rate cut and the BOT’s further relaxations on rules to encourage capital outflows.

But it has still risen 7.6% against the dollar so far this year, sustained by Thailand’s hefty current account surplus.

The BOT will also cut its forecasts for headline inflation for this year and next, currently 0.8% and 1.0%, respectively, said Mathee, though he added Thailand was not expected to face deflation.

Headline inflation was just 0.11% in October, the lowest in 28 months and far below the BOT’s 1-4% target range, which is being reviewed.



Kiwi takes flight as New Zealand’s central bank surprises by standing pat By Reuters



By Tom Westbrook

SINGAPORE (Reuters) – The beaten-up New Zealand dollar soared 1% on Wednesday after the central bank unexpectedly left interest rates on hold, while most other major currencies were little changed.

“It’s flying. It was a massive surprise,” said Imre Speizer, head of New Zealand strategy at Westpac Bank in Auckland. “There’s a lot of position exiting going on.”

Almost all analysts had forecast a cut in the 1% benchmark rate to a record-low 0.75%. Futures markets had priced in a better-than-75% chance of a cut as slack spending and a global slowdown held New Zealand’s economic growth at a six-year low.

But after two cuts this year, the Reserve Bank of New Zealand said it saw no urgency to ease policy again. Short positions, which had crept up to their highest level in more than four years , unwound fast.

The zoomed almost a cent higher after the decision, before settling a percentage point stronger for the day at $0.6303. Yields on two-year New Zealand bonds () jumped by their most in more than two years.

The currency has been one of the worst performing majors this year, dropping 4.7%. The day’s rise, while other currencies were mostly flat, has it on track for its sharpest one-day jump since January.

“It’s all been about the New Zealand dollar,” said Commonwealth Bank FX analyst Joe Capurso.

Elsewhere, the U.S. dollar was mixed and moves slight as investors looked for news on U.S.-China trade negotiations and awaited testimony from Federal Reserve Chairman Jerome Powell before a congressional committee at 1600 GMT.

The first public hearings in Trump’s impeachment inquiry also begin an hour earlier at 1500 GMT.

Hopes for an imminent deal to wind back tit-for-tat tariffs the world’s two largest economies have imposed on each other have lifted the dollar 1% this week to an overnight one-month high of 98.423 against a basket of currencies ().

Jitters over violence in Hong Kong and a lack of fresh details on trade talks in an overnight speech from U.S. President Donald Trump provided some support, holding the greenback steady and also lifting the safe-haven Swiss franc.

Against the Japanese yen the dollar bought 109.06 yen – not far below the 5-1/2-month high of 109.48 it hit last week. The Swiss franc rose 0.2% to 0.9908 per dollar, its strongest in a week.

The dollar scaled a month-high against the euro () overnight and traded marginally below that level at $1.013 on Wednesday.

The Australian dollar was pinned at $0.6842 by weak, but largely expected, wage data.

The British pound was steady at $1.2847, after a brief boost from the Brexit Party’s decision not to contest Conservative-held seats at December’s election faded.

Trump’s speech at the Economic Club of New York mostly reprised well-worn criticism of the U.S. Federal Reserve for failing to cut interest rates deeply enough and rhetoric about China’s “cheating” on trade.

However his remark that a deal “could happen soon,” was enough to steady the dollar, while his threats of further tariffs if talks fail knocked the .[CNY/]

“(It) was heavy on rhetoric and light on detail, leaving markets none the wiser,” National Australia Bank’s senior FX strategist Rodrigo Catril said in a note.

China’s yuan weakened past the 7-per-dollar mark after the speech and fell a little further to 7.0178 per dollar on Wednesday.





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New Zealand central bank seen cutting rates as economic growth slows: Reuters poll By Reuters



By Charlotte Greenfield

WELLINGTON (Reuters) – Most economists are expecting New Zealand’s central bank to cut rates to a record low at its last monetary policy decision of the year on Wednesday after the bank signaled in recent months it was willing to ramp up stimulus if necessary to combat slowing economic conditions.

Twelve out of 15 analysts polled by Reuters expected the Reserve Bank of New Zealand (RBNZ) would cut rates to 0.75% this week from the current 1%.

“The short-term growth outlook is subpar and risks are skewed to the downside, with the RBNZ needing to take out more insurance to prevent a more protracted undershoot of its employment and inflation objectives,” Mark Smith, senior economist at ASB Bank, said in a research note.

All 13 economists who forecast beyond this week’s meeting expected the bank to have cut rates by at least 25 basis points by the end of next year, with ANZ Bank forecasting rates would be as low as 0.25%.

The RBNZ at its monetary policy review in August stunned markets with the size of its 50-basis-point cut and signaled it would be willing to slash rates further, although it held steady at an official cash rate decision in September.

A slowing global economy, the protracted China-U.S. trade war and warnings of recession have spurred major central banks across the world to ease monetary policy.

At home, gloomy business confidence has been concerning the bank and poses a risk to growth as firms indicate their own activity is slowing and they are holding off on investment.

Gross domestic product data released in September showed that annual growth had slipped to 2.1% in the second quarter, the lowest since 2013.

The bank has struggled to support inflation around the 2% midpoint of its target band, with the number slipping to 1.5% in September.

The RBNZ now has a dual mandate of targeting maximum sustainable employment, meaning labor figures are also keenly in focus. Data released last week showed unemployment ticking up from a decade low but still lower than the bank had forecast in August.

Some economists believed that might tip the finely balanced decision in favor of staying put.

“The labor market is in better fettle than one would expect given the state of business confidence,” said Dominick Stephens, chief economist at Westpac Bank, which has forecast the bank will hold this week and cut in the first quarter of next year. “The RBNZ decision on Wednesday is a close call.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.