As Egypt Runs Out Of Dollars, Is It Next On The Devaluation Bandwagon?
Late on Friday Venezuela shocked the world when instead of reporting an update on the ailing health of its leader, as many expected it would, it announced the official devaluation of its currency, the Bolivar by nearly 50% against the dollar yet still well below the unofficial black market exchange rate. By doing so, it may have set off a chain reaction among the secondary sovereigns in the world, those who have so far stayed away from the “big boys” currency wars, or those waged by the Big 6 “developed world” central banks, in an attempt to also “devalue their way to prosperity” and boost their economies by encouraging exports even as the local population sees a major drop in its purchasing power and living standards. So in the game, where the last player to crush their currency inevitably loses, the question is who is next. The answer may well be America’s latest best north African friend, and custodian of the Suez Canal: Egypt.
As Reuters reports, in the ongoing underreported counterrevolution against the Muslim Brotherhood’s US-backed regime, the local population is increasingly scrambling to preserve their local-denominated paper wealth by converting it into the same currency that Bernanke is hell bent to crush some by some $85 billion per month. Problem is – Egypt is out of dollars.
Argentina limits dollar trading for arriving tourists in ports and airports
The Argentine government is further tightening the US dollar clamp. On Thursday the Central bank announced that state-run banks and agencies will be the only ones officially allowed to operate foreign currency exchange offices in airports and ports.
Each foreign traveller will be allowed to change up to 500 US dollars on arrival in Argentina, the Central Bank said.
The decision also cancels all permits to private banks and exchange houses that currently have branches at airports and ports dealing in foreign currency, the state-run news agency Telam said.
The Central Bank said in a press release that it had taken the decision due to what it described as “abusive practices that affect travellers arriving in Argentina.” It also said that the move was part of the national government’s fight against money laundering and terrorism.
Argentina’s currency controls Unfree exchange – 2011
Short-Term ECB Dollar FX Swaps With Fed Soar To Highest Since December 2009
While Europe is once again experiencing one of its brief, manic episodes of inexplicable euphoria sending all risk assets in the continent higher while everyone is still on vacation (and ahead of a surge in Spanish bond issuance in September, which only spikes even more in 2013 – more shortly), its banks have quietly run out of dollars again. Certainly, looking at the now irrelevant metric known as Libor which indicates precisely nothing of significance, and merely allows banks to feel good about themselves, and which has been declining, one could imagine that banks have zero problems finding unsecured follar funding. One would also be absolutely wrong because as the most recent ECB and Fed data confirm, 7-day dollar swaps between the ECB and New York Fed – the only real sign of dollar funding scarcity – has risen to $9.3 billion in the current week, the highest since December 9, 2009. And with 10 banks bidding at the last USD operation, one can be sure that at least 10 European banks are suddenly hoping that the bout of euphoria continues for at least 2 more weeks so that the executives of these 10 dollar impaired banks can continues their vacation in peace, until the eye of the European hurricane passes starting September 1.
Eurozone banking system on the edge of collapse
The eurozone banking system is on the edge of collapse as major lenders begin to run out of the assets they need to keep vital funding lines open.…
Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.
Fed Extends Dollar Swap Lines With Central Banks
Read more at http://investmentwatchblog.com
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