| Currencies: Signs of recovery elevate won
HONG KONG: The South Korean won rose to the strongest in six weeks on Wednesday as overseas investors bought stocks for a second day on signs the economy is recovering from a slowdown. "Rising stocks are leading expectations of more inflows of funds, boosting the won," said Hideki Hayashi, a Tokyo-based foreign-exchange strategist at Shinko Securities. "Steady export numbers in addition to expectations the free-trade agreement with the U.S. will help increase overseas sales are also supportive for the won." The won rose to 936.30 against the U.S. dollar, according to Seoul Money Brokerage Services. It touched 935.20, the highest since Feb. 16. Elsewhere, Taiwan's dollar touched a two-week low on speculation overseas investors will borrow the currency to purchase higher-yielding assets abroad.
Brazilian Real Holds Near Six-Year High on Investment Inflows
April 5 (Bloomberg) -- Brazil's real held near a six-year high as foreign investors moved money into the country to tap into a rally in the stock and bond markets. The real rose 0.1 percent to 2.0314 to the dollar at 3:05 p.m. New York time. Yesterday, the currency touched 2.0276 per dollar, its strongest since reaching 2.0170 on March 6, 2001. The real has gained 5.1 percent against the dollar this year, making it the best performer of the 16 most active currencies. ``It won't take long for the real to breach the 2.0-per- dollar level,'' said Mario Battistel, foreign-exchange director at Sao Paulo-based brokerage Corretora Novacao. ``There is an excess of dollars in the market.'' The central bank bought the U.S. currency in the spot market today in an attempt to soak up some of that liquidity and boost foreign reserves.
Currency hedges: The pros and cons for foreign stocks
Currency swings can quickly erase hard-won gains in a portfolio, but money managers at most of Canada's largest equity mutual fund groups with billions of dollars in foreign holdings do not hedge or insure their portfolios against exchange rate fluctuations. Andrew Massie, vice-president investment management and a portfolio manager with the Mackenzie Cundill group, says that to his knowledge, Cundill managers are "pretty much the only guys in Canada" that take such precautions full time." Volatile currencies are a two-edged sword in that they have the potential to help or wreak havoc on a portfolio. In 1998, the latest time the yen carry trade suffered a major breakdown, the yen climbed 35 per cent over five months against the U.S. dollar. The yen carry trade refers to borrowing of money at low interest rates in Japan and reinvesting it in higher-yielding securities and emerging markets.
Mexico to Sell Warrants to Allow Swap of Foreign Debt (Update3)
March 13 (Bloomberg) -- Mexico plans to sell securities that will allow investors to swap bonds denominated in foreign currencies for peso debt, part of a push to make the country's finances less vulnerable to declines in the currency. Investors who buy the Mexican warrants will be able to exchange bonds in dollars, euros, German marks and Italian liras that are due between 2008 and 2033 for peso-denominated bonds maturing in 2014 and 2024, according to investors who received the terms of the proposal. This is the second time Mexico uses warrants, which allows investors to make money as the yield gap between the government's foreign-currency bonds and peso bonds narrows, to help attract investment to its local bond market. Last year, investors exchanged about $2.9 billion in foreign currency debt for peso bonds in four separate transactions.
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