http://www.forexconspiracyreport.com/are-investors-afraid-of-foreign-currencies/
Are Investors Afraid of Foreign Currencies?
Are investors afraid of foreign currencies? According to Bloomberg Business a scared investing world is taking its money and running back home or to the US dollar as a safe haven. What is causing this and how should you react?
A tide of money went out to emerging markets for more than a decade, pushed by accommodative monetary policy in the U.S. and pulled by the promise of robust growth.
Now that tide is coming back in as investors seek to repatriate funds or flock to U.S.-dollar denominated assets as a safe haven amid sluggish economic growth and global market turmoil.
“There are around 47 trillion dollars in private and official investment abroad and far too many that wish to retreat home or to the U.S.,” writes Deutsche Bank Macro Strategist Sebastien Galy in a report titled “The Retreat of Global Balance Sheets.” “These flows are triggered in good part by a recognition that emerging markets’ potential growth is slowing down structurally without enough compensating growth in developed economies.”
As this trend continues we can expect to see sufficient financial liquidity in advanced economies like North America, Europe and Japan and insufficient liquidity in developing markets. And the answer is, yes, investors are afraid of foreign currencies and will continue to be until the rout in commodities turns around.
Until the Commodity Super Cycle Bottoms Out
Much of the developing world prospers when commodity prices are high and suffers when prices are low as they are now. Australian Mining looks at what will happen when commodity prices stay low.
3. According to Bloomberg Business a
scared investing world is taking its
money and running back home or
to the US dollar as a safe haven.
4. Before We Continue…
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6. A tide of money went out to emerging
markets for more than a decade,
pushed by accommodative monetary
policy in the U.S. and pulled by the
promise of robust growth.
7. Now that tide is coming back in as
investors seek to repatriate funds or
flock to U.S.-dollar denominated
assets as a safe haven amid sluggish
economic growth and global market
turmoil.
8. “There are around 47 trillion dollars in
private and official investment abroad
and far too many that wish to retreat
home or to the U.S.,” writes Deutsche
Bank Macro Strategist Sebastien
Galy in a report titled “The Retreat of
Global Balance Sheets.”
9. “These flows are triggered in good
part by a recognition that emerging
markets’ potential growth is slowing
down structurally without enough
compensating growth in developed
economies.”
10. As this trend continues we can
expect to see sufficient financial
liquidity in advanced economies like
North America, Europe and Japan
and insufficient liquidity in developing
markets.
11. And the answer is, yes, investors are
afraid of foreign currencies and will
continue to be until the rout in
commodities turns around.
15. It looks likely that the recent fall in
commodity prices may be one of the
biggest ever on record.
16. The fall may even match the 66%
implosion experienced between 1917
and 1931.
17. One fact in every supper commodity
cycle is that every rise in commodity
prices is followed by oversupply.
18. This oversupply continues for years
as companies battle it out in a
dangerous game of survival to cut
production and costs.
19. One fact in every supper commodity
cycle is that every rise in commodity
prices is followed by oversupply.
20. To the extent that prices of oil, metal
and food stay low for years so will the
value of the currencies of nations like
Brazil, Australia, Argentina, Nigeria,
Venezuela, Colombia, etc.
21. Prospect of low commodity prices for
years on end has investors and
traders afraid of many foreign
currencies.
24. The long term winners when
investors are afraid of foreign
currencies of developing nations will
be nations with safe haven
currencies.
25. Channel New Asia reports that the
Yen hits a one year high
as investors seek a safe haven.
26. The yen hit a one-year high versus
the dollar on Wednesday (Jan 20) as
investors sought the haven currency
amid a rout in equity markets and
worries about the faltering world
economy.
27. The dollar fell to 115.98 yen, its
lowest level in a year, before
recovering somewhat around 2200
GMT to 116.92 yen, down 0.6 per
cent from the same time on Tuesday.
28. “America’s dollar tumbled nearly a
percent to one-year lows against the
yen, a popular refuge when global
risks rise,” said Joe Manimbo, senior
market analyst at Western Union
Business Solutions.
29. “Coupled with a weakening Chinese
economy, the big fear is that sliding
oil prices could do the same to
inflation, raising the risk of economy-
choking deflation taking hold around
the world.”
