| Foreign currency investments may be off mark
Everyone seems to hate something these days. Hate clowns? Meet your fellow haters at IHateClowns.com. Think cilantro is a noxious weed? Go to IHateCilantro.com. Hate the Red Sox? Head to Yankee Stadium. In the investment world, everyone seems to be hating the dollar: The consensus is that the dollar will decline in value against other currencies. If you're a dollar hater, you have several new ways to bet against the buck. But pouring money into foreign currencies might not be the best way to display your pique. In the short term, money tends to flow to the country with the highest interest rates. Those flows, in turn, drive currency values up and down. For example, Japanese investors who buy U.S. Treasury bonds have to convert yen into dollars to make the purchase.
Thai trading curbs backfire, set stage for Baht gains
Thailand's baht, the second-best performer among Asian currencies this year, may keep gaining because investment restrictions aimed at protecting exporters have backfired.
Limits on bringing money into the country imposed Dec. 18 have eroded consumer confidence in Southeast Asia's second- largest economy, reducing demand for imports. The currency controls also spawned an offshore exchange rate that has risen five times faster that the official price of the baht.
The policies have created a ``vicious cycle of an inexorably strengthening baht,'' said John Stuermer, managing director of Bear Stearns Cos. in Singapore. ``The capital controls are supposed to curb the baht's rise but every time they do something stupid it decreases consumption and imports.''
The military junta that seized power in a bloodless coup imposed the rules to curb last year's 16 percent gain in the currency and protect exporters.
Indian shares plunge, Chinese stocks surge to new record as most ...
HONG KONG (AP): India shares tumbled nearly 5 percent and Japanese shares also fell on signs of eroding business confidence. But most other Asian markets advanced Monday, and Chinese shares hit a new record. In Mumbai, Indian shares plunged as investors were spooked by fresh moves from the central bank to tighten monetary policy in a bid to rein in sizzling economic growth that has stoked inflation. The Bombay Stock Exchange's 30-share Sensex index tumbled 617 points, or 4.7 percent, to 12,455 points, while on the broader National Stock Exchange, the 50-company S&P Nifty index fell 4.9 percent to 3,634 points. Banking stocks led the slide as investors worry that the central bank's latest measures, announced Friday after close of trading, would slow credit growth and impact banks' profitability. Automobile stocks also fell sharply because of fears that higher lending rates would adversely impact car sales. State Bank of India and the ICICI Bank, the country's top two, fell 6.3 percent and 5.7 percent respectively.
FOREXYARD: Daily Forex Analysis
Yesterday, the Federal Reserve said that it would keep the federal funds rate unchanged at 5.25%, unchanged since June. The rate decision caught few off-guard, but investors cheered language in the statement suggesting the economy remained on solid footing. Crude inventories rose by four million barrels last week to 329.3 million barrels, well above average for this point in the year, according to a report released Wednesday by the Energy Department which may cause some ease in Crude Oil prices and give a push to the US industry. Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters. Recent readings on core inflation have been somewhat elevated.
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