Morning Brief – Asian Currency Wars

Asian Currency Wars

A thoughtful article in the South China Post on Saturday evening raised the spectre for what many fear but few choose to put into words: China opting for a significant devaluation of the Yuan to make it more competitive and that in turn triggering devaluations in the other Asian economies.  The reason for this is the strength of the US Dollar which has resulted in outflows from Asia as investors jump on the bandwagon of an appreciating currency and a strong economy in the USA. Wiser market hands counsel patience as the expectation is for the USD to run out of steam once interest rates start to be cut. Meanwhile it’s a case for China of putting right what’s wrong with their economy and last week’s news of the USD 42 billion being pumped into the Real Estate sector is a good start. However easier written than done with Japan being a case in point of apparently fruitless and expensive Central Bank intervention amid a continually weakening currency.

GBP/USD 1.2700

French Unemployment

At 7.3% the absolute level of Franc’s unemployed is holding steady allowing Monsieur Le President himself to declare that all is well. However beneath that number the fact remains that the over 50’s have an unemployment rate of 5.1% while almost 1 in 5 of those under 24 are not working at 18.1%. Apart from being a drag on the economy of having so many younger and supposedly economically energetic people out of work, this statistic does not augur well for the future of Franc’s economic performance.

EUR/JPY 169.20

Spain’s Heat Map

In 2022 almost 12,000 people died due to the great heat experienced in Spain, so Spain’s Ministry of Health has come up with a statistical heat map that says that 2024 has a 70% chance of Spain having temperatures in the top 20% since heating records began. Lots of guff about the country being broken down into 182 metro health zones, but all citizens of and visitors to Spain need to know is that as always July and August need to be treated with respect and with sun hats in the Iberian peninsula.

GBP/EUR 1.1670

Germany

8 Climate activists glued themselves to a runway at Munich airport on Saturday. They neither garnered the reaction that they were hoping for nor was the offence considered to be minor and there is talk of changing the law to punish such demonstrations much more severely. Being Germany the airport authorities and police unglued the 8 with ruthless efficiency and the airport was re-opened within 2 hours. What clinched the lack of support for the activists was that they had attempted to stop hard working Germans from jetting off to Southern Europe for their annual sunshine holidays; now that is serious as that could have meant that those uber competitive German tourists might not be the first to put down their towels on the sun loungers.

EUR/USD 1.0865

Let it Be

This day in 1970 The Beatles film, Let it Be premieres simultaneously at the Liverpool Gaumont Cinema and the London Pavilion. In true pop tradition not one member of the Group attend either event thereby ensuring…even more publicity for the documentary about the then most famous band in the world that was in the last throes of falling apart.

When I find myself in times of trouble, Mother Mary comes to me
Speaking words of wisdom, let it be
And in my hour of darkness she is standing right in front of me
Speaking words of wisdom, let it be

Let it be, let it be, let it be, let it be
Whisper words of wisdom, let it be

And when the broken hearted people living in the world agree
There will be an answer, let it be
For though they may be parted, there is still a chance that they will see
There will be an answer, let it be

Let it be, let it be, let it be, let it be
There will be an answer, let it be

Let it be, let it be, let it be, let it be
Whisper words of wisdom, let it be

Let it be, let it be, let it be, let it be
Whisper words of wisdom, let it be, be

And when the night is cloudy there is still a light that shines on me
Shinin’ until tomorrow, let it be
I wake up to the sound of music, Mother Mary comes to me
Speaking words of wisdom, let it be

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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