#export price norm

[mamomvpy]

If anything the Bank of Canada should ease monetary conditions

If anything the Bank of Canada should ease monetary conditions

While the Federal Reserve – rightly or wrongly – has initiated a rate hike cycle it is not given the the central bank in neighboring Canada should follow suit. In fact, according to our our composited indicator for Canada monetary conditions monetary policy is too tight for the the Bank of Canada to hit its 2% inflation over the medium-term. The Bank of Canada later today will announce its rate…

View On WordPress

[mamomvpy]

‘Currency instability’ should NOT be concern for Canada

‘Currency instability’ should NOT be concern for Canada

The commodity currencies of the world continues to take a beating on the back of the sharp drop in oil prices. This is now causing some to fear “currency instability”. Just these this story from Canada’s Financial Post: The Canadian dollar is falling too far and too fast, damaging public and business confidence in Canada, say economists. National Bank Financial Markets warned in a new report…

View On WordPress

[mamomvpy]

PBoC should stop the silliness and float the RMB

PBoC should stop the silliness and float the RMB

This is morning we got this news (from Bloomberg): China’s central bank conducted the biggest reverse-repurchase operations since September, adding funds to the financial system after money-market rates surged and equities slumped. The People’s Bank of China offered 130 billion yuan ($19.9 billion) of seven-day reverse repos on Tuesday at an interest rate of 2.25 percent. The monetary authority…

View On WordPress

[mamomvpy]

Oil exporters do not devalue to boost exports, but to stabilize public finances

Oil exporters do not devalue to boost exports, but to stabilize public finances

Yesterday Azerbaijan’s central bank gave up its pegged exchange rate regime and floated the Manat. The Manat plummeted immediately and was essentially halved in value in yesterday’s trading. Azerbaijan is not the first oil exporter this year to have given up its fixed exchange rate policy. Kazakhstan did the same thing a couple of months ago and last week South Sudan was forced to devalue by 85%.…

View On WordPress

[mamomvpy]

The 'Dollar Bloc' continues to fall apart - Azerbaijan floats the Manat

The ‘Dollar Bloc’ continues to fall apart – Azerbaijan floats the Manat

I have for sometime argued that the quasi-currency union ‘Dollar Bloc’ is not an Optimal Currency Area and that it therefore is doomed to fall apart. The latest ‘member’ of the ‘Dollar Bloc’ left today. This is from Bloomberg: Azerbaijan’s manat plunged to the weakest on record after the central bank relinquished control of its exchange rate, the latest crude producer to abandon a currency peg as…

View On WordPress

[mamomvpy]

Bank of Canada at the Zero Lower Bound: The Export Price Norm to the rescue

Bank of Canada at the Zero Lower Bound: The Export Price Norm to the rescue

The continued drop in the oil prices have caused the Bank of Canada to reconsider whether it should cut it key policy rate – the Overnight rate – and in a speech earlier this week BoC governor Stephen Poloz said that he would not rule out negative interest rates in Canada even though he did not expect it and he also voiced some worries about negative rates in general. I overall think it is…

View On WordPress

[mamomvpy]

Kwanza devaluation is the right decision, but fundamental regime change is needed

This is from Reuters: Angola’s central bank devalued the kwanza currency by about 6 percent against the dollar, a statement showed, a move analysts said was aimed at stimulating foreign currency inflows eroded by falling global oil prices.  According to the bank’s latest update on the official exchange rate, issued late on Thursday, one U.S. dollar will now cost 116-117 kwanza, compared with…

View On WordPress

[mamomvpy]

Talking to my phone: The Gulf States should peg their FX rates to oil prices

Oops I did it again – this time I talk to my phone about monetary policy in the Gulf States and my suggestion that these countries should peg their currencies to the oil price or a basket of the oil price and the US dollar. This is of course what I have suggested should be termed the Export Price Norm (EPN). Have a look here. See some of my older posts on EPN here: Oil-exporters need to rethink…

View On WordPress