Forex - Canadian dollar gains shortlived after weak US, strong Canada jobs data

09.07.07, 12:34 PM ET

LONDON (Thomson Financial) - The Canadian dollar fluctuated against its US counterpart, initially gaining after a set of strong Canadian jobs data was followed by very weak US employment figures, but then falling back on fears that a sharp slowdown in the US could impact badly on Canada.

Figures released earlier this afternoon showed the Canadian economy added 23,300 jobs in August, well above the median expectation of 12,000 and leaving the unemployment rate at a 33-year low of 6.0 pct.

By contrast, jobs data out of the US were far worse than expected, showing a drop in payrolls during August of 4,000, the first decline in four years and confounding analysts' forecasts for a gain of 118,000.

Immediately after the US data, the US dollar fell to an 11-day low against the Canadian dollar of 1.0472 before later climbing back above the 1.05 cad level.

'Fears that contagion may creep across the border and knock the stuffing out of Canadian growth' caused the US dollar to rebound after the initial falls against the Canadian currency, said Peter Wadkins at Thomson IFR Markets.

'Traders have bought back some of the knee jerk US dollar sales and are moving to flat, trying to figure out what this data means for USD/CAD and global markets in general,' he said.
At 4.09 pm BST, the Canadian dollar was trading at 1.0529 per US dollar.

Source : http://www.forbes.com/markets/feeds/afx/2007/09/07/afx4093587.html

Forex reserves breach $30-B mark

By Doris DumlaoInquirer

09/08/2007

MANILA, Philippines -- The Philippines’ foreign exchange reserves breached the $30-billion mark in August despite the global financial volatility that tempered the central bank’s dollar purchases during the month.
Governor Amando Tetangco Jr. of the central bank, Bangko Sentral ng Pilipinas (BSP), reported that the country’s gross international reserves surged to $30.3 billion last month, or $2.3 billion higher than the level as of end-July.
The latest figure has exceeded the BSP’s revised yearend target of $30 billion for the gross international reserves (GIR), which was announced only on Friday last week.
“Sustained foreign exchange inflows enabled the BSP to build up its reserves level while at the same time service its debt and those of the national government’s,” Tetangco said.
“Receipts of income from investment abroad also contributed to the increase in the GIR level,” he said.
The current GIR level can cover 5.6 months’ worth of imports of goods and payments of services and income, and is equivalent to 5.9 times the country’s short-term external debt, the BSP said.
The GIR rose last month despite net outflows of foreign investments in stocks and bonds. The renewed aversion to assets from emerging markets like the Philippines was triggered by concerns over rising delinquencies in the US subprime, or high-risk, home loan market.
Subprime mortgages are loans made to borrowers with imperfect or limited credit histories and little equity. The ripples have spread across the globe as western banks took big hits from structured financial products with underlying assets invested in these subprime mortgages.
“Due to the risk aversion factor, the BSP eased its dollar-for-peso swap activity in the onshore swap market to ensure adequate bank liquidity,” Citigroup economist Jun Trinidad said in an Aug. 20 market review.
Trinidad said there were less dollar forwards being sold by the BSP in August, implying the following:
• lower spot market dollar purchases and thus less need to worry about excessive money supply growth, and
• preference not to roll over maturing dollar forward contracts.
The country’s strong foreign reserve buildup has been supported by remittances from overseas Filipino workers, foreign direct investment and portfolio investments. These inflows allowed the BSP to become a heavy buyer of dollars on the currency spot market Philippine Dealing System before the global volatility seen in August.
In previous months, the BSP intensified the use of foreign currency swaps to mop up excessive foreign inflows. Based on the latest BSP data, its outstanding currency swaps slightly fell to $9.62 billion at end-June from $10.06 billion at end-May.
“With the peso falling against the US dollar as risk aversion persists alongside expectations of net portfolio outflows, BSP was probably in a dollar net selling mode -- the flipside of which became less urgency to sterilize liquidity via the swaps,” Trinidad said.

Source : http://business.inquirer.net/money/topstories/view_article.php?article_id=87377

Forex reserves marginally dip to $228.8 billion

8 Sep, 2007, 0222 hrs IST

Foreign exchange reserves declined marginally by $2 million during the week ended August 31 on account of a dip in valuation of gold in reserves and revaluation of non-dollar currencies in reserves vis-a-vis the dollar, reports Our Bureau in Mumbai. However, foreign currency assets rose $6 million during the week.

According to the latest figures released by the Reserve Bank of India on Friday in its weekly statistical figures, total foreign exchange reserves, including gold and SDR, came down by $2 million during the week ended August 31 to touch $228.8 billion.

While the value of gold in reserves dipped $6 million, foreign currency assets rose $4 million. The other components of reserves — SDR and reserves with the IMF remained unchanged during the week.

Reserves rose only marginally also because FII inflows were not too strong during the week. The reduction in forex reserves has resulted in a fall in money creation. Expressed in rupee terms reserves shrunk Rs 4,536 crore during the week.

This is reflected in the reserve money figures, of which net foreign exchange reserves with RBI is a major component. The reserve money, however, dipped Rs 2,267 crore largely on account of a dip in all major sources — net RBI credit to the government as well as net foreign exchange reserves and other components of reserve money.

In the other developments reported in the WSS, the government has vacated its ways and means advance (WMA) — a temporary advance to meet its revenue mismatches-account with the central bank.

Source : http://economictimes.indiatimes.com/Markets/Forex/Forex_reserves_marginally_dip_to_2288_billion/articleshow/2349088.cms