FOREX TRADING HITS $4 TRILLION A DAY - The volume of currency trading the world now sees every day is worth $4 trillion. That is according to figures this week from the Bank of International Settlements, the central bankers' central bank. BIS conducts its survey every three years, and in 2010 the trade in global foreign exchange markets was 20% higher than in 2007.
The Wall Street Journal's Dave Kansas, in London, says an indication of the size of the figure is that the fact that the biggest currency reserves holder in the world - China - has reserves of $1-2 trillion. He says the survey was conducted during the financial crisis and the euro crisis and says the increase was accelerated by computer-driven trading and hedge funds. The currency markets are highly sophisticated, with the big players being the hedge funds and the big banks. Most of the trade occurs in London due to its favourable time zones. London actually holds 38% of the market.
He says the issue is a very challenging one for governments, who now less frequently intervene in the currency markets. He points out that the Swiss government has been trying to intervene for some time to prop up the Swiss franc, while the US Federal Reserve has not intervened for about ten years.
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MORNING BRIEFS - The influential Lex column in the Financial Times this morning argues that the National Asset Management Agency - the solution to Ireland's banking crisis - may be part of the problem. 'Is the National Asset Management Agency working?' it asks. 'Nobody knows,' it answers. Lex says NAMA is an odd creature: part debt collection agency, part property developer. It was meant to fix the broken banks, Lex says, convince taxpayers they might be repaid and reassure the markets the banks' liabilities would be met in full. Facing in three directions, it has not appeared convincing in any: slow, bureaucratic, initially indecisive, and almost excessively transparent. It refers to Anglo as 'the rotting corpse in the disaster zone of Irish banking', and says NAMA needs to provide the certainty investors and taxpayers need on the real cost of the mess, as investor sentiment towards Ireland turns sceptical again.
*** European companies have called for equal access to China's markets and expressed concern that Beijing is backsliding on regulatory reform. In its annual position paper, the European Union Chamber of Commerce in China listed a familiar array of barriers that it said were preventing its members from competing with their local rivals on a level playing field. These include discrimination in favour of Chinese firms when enforcing environmental and labour laws; compulsory certification requirements that unduly restrict market access for foreign firms; and preferential treatment for products containing indigenous intellectual property. The Chamber said less than 3% of EU outbound foreign direct investment in 2008 went to China because of the obstacles or risks for European companies of doing business there.
*** Sales of Jameson grew by 12% in the past year, according to results from its owner Pernod Ricard. The company, one of the worlds biggest makers of wine and spirits, says there was strong growth in emerging markets, but persisting difficulties in Western Europe, especially in Spain, the UK, Ireland and more recently in Greece.
*** On the currency markets this morning the euro is trading at $1.2788 cents and 82.94 pence sterling.
