Small Exchange: Black Friday, India’s currency and Asia reacts to Trump
The week's currency news rounded up.
Black Friday shopping exchange rates
The biggest shopping day in the United States, Black Friday, takes place later this week. The good news for shoppers? Exchange rates haven't shifted much overall since the last time the event rolled around.
At its peak in April this year, the Australian Dollar bought close to 78 US cents in April this year. However, comparing November 2015 AUD/USD exchange rates with November 2016, the levels are almost identical.
In November last year 1 AUD = 0.722 USD, whereas this month 1 AUD = 0.733 USD.
For example, buying a US$50 book during last year's sale would have cost AUD$69.19. This year it will set you back around a dollar less, coming in at AUD$68.19.
Bonds rally on India's currency shutdown
Last week India's PM Narendra Modi withdrew all 500 and 1,000 rupee banknotes from circulation.
The move sparked a rally in bonds that could extend into late December as markets bet on a rate cut as early as next month, according to the Indian Express.
Anindya Dasgupta, head of local market trading at Barclays, expects this will have "a deflationary impact as well as hit growth and that can bring forward the timing of any rate cut or rate cuts".
Banks have received more than $US44 billion in deposits, with a significant portion invested into bonds.
Economists say the move will be beneficial over the long-term, reducing tax evasion and corruption.
Zimbabwe’s illegal cash dealers are now online
Seven years on from dollarisation, Zimbabwean's are again dealing in illicit cash, however, this time they are forgoing the risks of street trading, instead utilising technology to make transactions.
Zimbabwe's popular Sunday paper The Standard reports a number of groups are using global messenger service WhatsApp to strike daily deals.
These groups have connections with bank employees with access to cash, taking advantage of real-time payment systems.
Zimbabwean-based economist Prosper Chitambara said parallel markets are a product of cash shortages.
Asian central banks react to Trump win
Central bankers throughout Asia are taking some interesting measures to combat unexpected market movements since Donald Trump's U.S. presidential election victory.
The Wall Street Journal reports Bank Indonesia intervened directly to prop up a sliding currency. Malaysia's central bank attempted to restrict the offshore futures market to support its flailing currency.
Japan's reaction was even more unorthodox, with the nation's central bank stemming two- and five-year yields on Japanese government debt.
However, despite these measures economists say central banks' powers are limited in their abilities to stem currency slides while money is flowing into the US dollar.
Each week Small Exchange sums up currency news from around the globe and looks at how it impacts exchange rates and options.
- Small Exchange: G20 still against competitive forex devaluations, Malaysia’s liberalisation and Westpac and ANZ fined for market misconduct
- Small Exchange: Iceland lifts capital controls, Nigeria’s forex reserves keep climbing, Barbados tourism blamed for foreign exchange leaks
- Small Exchange: China has ample forex reserves, Canada reforms rates data, Egypt’s gold rises
- Small Exchange: India is vacuuming cash, UK’s new £1 coins and Mexico hedges forex reserves
- Small Exchange: Manipulation in South Africa, Nigeria’s forex review and Chinese property