Indian rupee breaches 80 per dollar, hits new record low

MUMBAI - The Indian rupee fell to more than 80 per US dollar for the first time on record Tuesday, as the greenback extended its rally and foreign capital outflows intensified.

The rupee 80.0600 against the greenback soon after trading started, Bloomberg data showed.

High inflation and rising interest rates in the United States coupled with fears of an impending recession in the world's biggest economy have fuelled a broad dollar rally in recent weeks as investors turn increasingly risk-averse.

Tighter US monetary policy has exacerbated outflows from emerging markets such as India, where foreign investors have withdrawn a net $30.8 billion in debt and equity this year.

Data released last week showed US consumer price inflation hit a fresh four-decade high in June, exceeding market forecasts and stoking expectations of another large Federal Reserve rate hike next week.

In a written statement to the Indian parliament on Monday, finance minister Nirmala Sitharaman attributed the rupee's sharp fall to external reasons.

"Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian Rupee against the US dollar," she said.

At the same time, the Indian currency has strengthened against the British pound, the Japanese yen and the euro in 2022 so far, Sitharaman added.

But higher crude prices have resulted in a deteriorating trade balance in a country that imports 80 percent of its oil needs.

India's merchandise trade deficit widened to a record $26.18 billion in June, official data showed last week, largely because of higher crude and coal import prices.

In its monthly economic review, the Ministry of Finance said costlier imports could widen the current account deficit and cause the rupee to depreciate further.

Consumer price inflation in India, the world's sixth-largest economy, cooled off slightly to 7.01 percent in June after hitting an eight-year high of 7.79 percent in April.

But price rises have persisted well above the central bank's two-to-six percent target range despite consecutive interest rate hikes in May and June.

The central bank has also sold more than $34 billion of its foreign currency reserves in an effort to stabilize the rupee.

Agence France-Presse

Asian stocks perk up, safe-havens pullback on hopes for China stimulus

TOKYO -- Asian stocks steadied on Wednesday on hopes of additional Chinese stimulus to lessen the economic impact of a coronavirus outbreak, but risks remain as the illness continues to spread and the death toll neared 500.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent. Australian shares were up 0.58 percent, while Japan's Nikkei stock index rose 1.19 percent.

The safe-haven yen and Swiss franc nursed losses versus the dollar while the yuan held on to gains in offshore trade in a tentative sign of improvement in risk appetite as investors monitor the impact of the virus.

Oil prices, however, remained weak on worries about a long-term dent in demand for energy and other commodities despite hopes for more output cuts from OPEC and its allies.

China and other countries have imposed travel restrictions to try to contain a new virus that emerged in the central Chinese city of Wuhan late last year, slamming the breaks on manufacturing and tourism in the world's second-largest economy.


Many investors argue that any slowdown will be temporary and that Chinese policy steps are reason to remain optimistic about the growth outlook, but so far public health officials have not found a way to stop the spread of the virus both inside and outside of China.

"We're going to have a strong day in Asia, but whether this is the reversal of a downtrend remains to be seen," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"Oil investors remain pessimistic about demand disruptions, but equity investors, especially overseas, are discounting the impact of the virus."

US stock futures fell 0.18 percent in Asia on Wednesday. The S&P 500 rose 1.5 percent on Tuesday and the tech-heavy Nasdaq rose to a record high.

The People's Bank of China (PBOC) is likely to lower its key lending rate - the loan prime rate - on Feb. 20, and cut banks' reserve requirement ratios in the coming weeks, policy sources told Reuters.

The PBOC has already pumped hundreds of billions of dollars into the financial system this week. This helped Chinese stocks stabilize on Tuesday following a rout that wiped out around $700 billion in market capitalization on Monday when Chinese markets opened after an extended holiday.

The virus has already claimed nearly 500 lives. Japan's health minister said on Wednesday 10 people on a cruise ship at the port of Yokohama have tested positive for the new virus.

In the currency market, the yen traded at 109.46 per dollar, close to the lowest in almost a week. The Swiss franc held steady at 0.9635 versus the dollar following a 0.3 percent decline on Tuesday.

In the offshore market, the yuan traded at 6.9898 per dollar after rising on Tuesday for the first time in five trading sessions.

Benchmark 10-year Treasury yields extended gains in Asia, rising to 1.6043 percent in another sign of receding concern about the coronavirus.

US crude ticked up 0.12 percent to $49.67 a barrel in Asia but remained below the psychologically important $50 a barrel mark.

US oil futures have lost 14.8 percent since China confirmed on Jan. 21 that human-to-human infection of the previously unknown virus is possible, which kicked of a rout in global markets as the number of cases and the death toll rose.

source: news.abs-cbn.com

US Treasury reverses currency manipulator label for China

WASHINGTON — The United States on Monday removed the currency manipulator label it imposed on China last summer, in a sign of easing tensions between the two economic powers after nearly 2 years of conflict.

Just 2 days before President Donald Trump is set to sign a "phase one" trade agreement with China, the US Treasury said in its semi-annual report to Congress that the yuan has strengthened and Beijing is no longer considered a currency manipulator.

Although Treasury refrained from slapping the label on China in its report last May, Trump in August angrily accused Beijing of weakening its currency "to steal our business and factories," re-stating a long-standing grievance.

Chinese authorities in August allowed the yuan to fall below 7 to the dollar for the first time in a decade, sending shudders through stock markets at the time and stoking Trump's ire.

"Over the summer, China took concrete steps to devalue its currency," the yuan or renminbi (RMB), and those moves "left the RMB at its weakest level against the dollar in over 11 years," Treasury said.

However, more recently was strengthened to 6.93 to the dollar and Treasury said the trade pact addresses currency issues.

"In this agreement, China has made enforceable commitments to refrain from competitive devaluation and not target its exchange rate for competitive purposes," Treasury Secretary Steven Mnuchin said in a statement.

However that commitment is identical to the one Beijing has long made as part of the Group of 20 major global economies.

SYMBOLIC MOVE 

Though the semi-annual currency report always gains attention as a key sign of relations between the powers, the currency manipulator designation was largely symbolic.

The label calls for the US Treasury committed to work with the International Monetary Fund to "eliminate the unfair competitive advantage" created by China's alleged actions and to consult with Beijing about the matter.

However, many economists questioned the decision to label China a manipulator.

"China shouldn't have been designated to start with. Small current account surplus/GDP; scant intervention," Mark Sobel, a former Treasury official, said on Twitter.

While he acknowledged the large trade surplus, he said "economists disregard those."

"RMB fell in response to Trump's tariffs. Designation was blatant/errant political act," Sobel tweeted.

As part of the trade deal "China has also agreed to publish relevant information related to exchange rates and external balances."

Mnuchin said the phase one deal is significant and "will lead to greater economic growth and opportunity for American workers and businesses."

However, Treasury said Beijing still needs to take steps "to stimulate domestic demand and reduce the Chinese economy’s reliance on investment and exports."

Top Chinese trade envoy Liu He arrived Monday in Washington on Monday ahead of Wednesday's expected signing of the agreement.

After multiple rounds of tariffs, the US trade deficit in goods through November 2019 was running at over $320 billion, which is about $62 billion below the same period of 2018.

"Treasury remains disturbed by the persistent and excessive trade and current account imbalances that mark the global economy," the report said.

The US Trade Representative's Office announced over the weekend that as part of the initial trade deal, Washington and Beijing will hold "at least bi-annual" meetings -- something that previous administrations did for years but that Trump scrapped in favor of a more aggressive approach.

Mnuchin and Federal Reserve Governor Jerome Powell are also will conduct macro-economic meetings with top Chinese officials "on a regular basis," USTR said.

The currency report had eight other countries on the "monitoring list" due to concerns about their currency practices: Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore, Switzerland, and Vietnam.

Agence France-Presse

PayPal abandons Facebook-backed Libra cryptocurrency group

SAN FRANCISCO - Pioneering digital payments firm PayPal on Friday said it is abandoning an alliance intended to oversee the Facebook-backed Libra cryptocurrency, which has come under attack by regulators.

"PayPal has made the decision to forgo further participation in the Libra Association at this time," the California-based company told AFP.

"We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future."

International outcry is mounting over Libra -- with central banks and governments railing against Facebook's upstart cryptocurrency and questions over how it would be regulated.

"It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra -- a generational opportunity to get things right and improve financial inclusion," association head of policy Dante Disparte said in response to an AFP inquiry.

"The journey will be long and challenging. We're better off knowing about this lack of commitment now, rather than later."

Facebook unveiled plans in June for Libra -- which will roll out in 2020 -- to be backed by a basket of currency assets to avoid the wild swings of Bitcoin and other virtual units.

The non-profit Libra Association, based in Geneva, will oversee the blockchain-based coin.

Facebook envisions Libra as a new global cryptocurrency, pledging to deliver a stable virtual money that lives on smartphones and could bring over a billion "unbanked" people into the financial system.

"The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard," Disparte said.

"Commitment to that mission is more important to us than anything else."

Mastercard, Visa and other financial partners enlisted to oversee Libra are reportedly having second thoughts as regulators unleash ire on the project and dig for information from members of the association.

Other Libra backers include ride-hailing apps Lyft and Uber.

The head of the association said last week that the project's leaders aimed to "reassure" regulators worried about the virtual money.

In leaked comments from a meeting of Facebook employees in July, Facebook chief executive Mark Zuckerberg said he remained optimistic about Libra despite harsh comments from public officials in several countries.

"The public things, I think, tend to be a little more dramatic," he said.

"But a bigger part of it is private engagement with regulators around the world, and those, I think, often, are more substantive and less dramatic... That's where a lot of the discussions and details get hashed out on things."

COOK'S VIEW

In an interview published Friday in French newspaper Les Echos, Apple chief executive Tim Cook said he was uncomfortable with the idea of a company taking over roles typically reserved for governments.

Without specifically naming Facebook, Cook said issuing currency, like national defense, is best left to states.

Facebook and some two dozen partners released a prototype of Libra as an open source code for developers interested in weaving it into apps, services or businesses.

Martin Chorzempa, a research fellow at the Peterson Institute for International Economics, questioned whether Libra would be able to fulfill its vision.

In particular, Libra will need to comply with regulations that require collecting personal information about customers in order to expose crimes such as money laundering or fraud.

"It is not clear to me that Libra is anywhere near being able to perform those know-your-customer requirements that would allow them to legally serve these communities," Chorzempa said.

"Libra would have to work with governments to make sure they are compliant or get those rules changed, and that is a difficult process."

source: news.abs-cbn.com

Trump flirts with currency war in escalating conflict with China

WASHINGTON - President Donald Trump on Thursday took a step closer to sparking a currency war in the escalating conflict with China, saying he is not happy with the strong US dollar.

Trump has pursued a policy of maximum pressure, including subjecting all Chinese goods to punitive tariffs as of September 1, and accusing Beijing of manipulating its currency to gain a competitive edge.

In a move that breaks with decades of US policy, Trump on Thursday seemed to call for a weaker dollar to help American companies compete.

"As your President, one would think that I would be thrilled with our very strong dollar. I am not!" he said on Twitter.

"The Fed's high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing, ... John Deere, our car companies, & others, to compete on a level playing field."

The latest outburst comes days after the US Treasury labeled Beijing a currency manipulator for allowing the yuan to depreciate slightly in the face of new US tariffs.

Economists roundly criticized the move, saying Beijing if anything has been intervening in currency markets to keep the yuan from falling further in the face of an economic slowdown and the uncertainty created by Trump's trade war.

"Labeling China as a manipulator is totally fallacious. They are not manipulating," said C. Fred Bergsten, founder of the Peterson Institute of International Economics.

"It's fake news, as Trump would say," Bergsten told AFP.

But while he said the move stops short of a full-blown currency war, the risks are real.

If the administration tries to sell dollars to weaken the exchange rate and Beijing fights back with its own intervention, that could trigger a war, he said.

"Getting into a currency war would be very risky business. Particularly with this administration, which nobody trusts anyway," Bergsten said.

LEANING AGAINST THE WIND

William Reinsch, a trade expert and former congressional adviser, warned of the risks of weaponizing currencies, something done in the early 1930s, that exacerbated the Depression.

"The worst thing that can happen is we get into one of these cycles of competitive devaluation," he told AFP.

For decades, US administrations of both parties have steadfastly advocated keeping the dollar strong since that provides stability and can hold down inflation by making imported goods less expensive.

But a strong currency also makes US exports more expensive. Construction and farm machinery manufacturer Caterpillar recently lowered earnings targets for this year, given declining sales in China amid the tariff battle.

Reinsch, of the Center for Strategic and International Studies, said Trump has painted himself into a corner and his hardline tactics with China make a deal less likely.

"He really is in a kind of a box, because they're not going to do what he wants and there's not an easy way out," he told AFP.

Trump also has been relentlessly pressuring the Fed, demanding it cut interest rates in almost daily tweets.

"With substantial Fed Cuts (there is no inflation) ... the dollar will make it possible for our companies to win against any competition," he said on Twitter.

US central bankers "have called it wrong at every step of the way," Trump said.

But economists strongly refute this notion and say it is the strength of the US economy compared to others like the slowing eurozone, that has pushed up the value of the dollar.

And Trump's own trade war adds to uncertainty that has caused businesses to hold off on investment, and for investors to seek safe havens, including buying US dollars, they say.

And Bergsten cautioned that any Trump administration bid to weaken the dollar is unlikely to be effective in any case.

"Any effort to weaken the dollar through intervention or anything else would be really leaning against a very strong wind and I don't think there is much prospect for their finding a way to do it."

source: news.abs-cbn.com

France, Germany worried over new Facebook currency

CHANTILLY, FRANCE - The finance ministers of France and Germany on Wednesday expressed serious reservations about Facebook's planned Libra cryptocurrency because of its possible impact on global financial stability.

Facebook last month unveiled its plans for Libra in an announcement greeted with concern by governments and critics of the social network behemoth around the world.

The issue was at the forefront of the minds of ministers and central bankers from the G7 group of most developed economies as they kicked off a two-day meeting in Chantilly outside Paris on Wednesday.

"The G7 finance ministers and central bankers who are here have serious concerns," said German Finance Minister Olaf Scholz.

"They want to be sure that all existing regulations are adhered to, and if they should be changed in the future, so that we can guarantee the stability of the international financial system," he added.

"We are talking about currency stability, security, data protection, and democratic control," he added.

French Finance Minister Bruno Le Maire, who has warned about Libra repeatedly since the launch announcement, said "the conditions are not yet in place today for Libra to be introduced."

He said he hoped the G7 would consider the necessity of a "framework or a regulation" and also "what would be the conditions that would make such an instrument feasible."

"Today, we cannot accept that an exchange instrument comes into being when it does not respect any of the precautionary rules that all sovereign currencies are required to abide by."

Their comments echoed warnings issued on Monday by US Treasury Secretary Steven Mnuchin, who was also present at the meeting.

He said Facebook must meet "a very high standard" before it moves ahead with Libra, saying US regulators have already expressed concerns to the company.

Mnuchin that these kinds of virtual currencies have in the past been associated with money laundering and illicit activities.

"Whether they're banks or non-banks, they're under the same regulatory environment," Mnuchin told reporters at the White House.

Libra is widely regarded as a challenger to dominant global player bitcoin. Expected to launch in the first half of 2020, Libra is designed to be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

source: news.abs-cbn.com

Facebook needs 'very high standard' for Libra coin: US Treasury

WASHINGTON - Facebook must meet "a very high standard" before it moves ahead with its planned digital currency Libra, US Treasury Secretary Steven Mnuchin said Monday.

Mnuchin said US regulators have already expressed concerns to Facebook about the plan for a global cryptocurrency, noting that these kinds of virtual coins have in the past been associated with money laundering and illicit activities.

"Whether they're banks or non-banks, they're under the same regulatory environment," Mnuchin told reporters at the White House, adding that Facebook "will have to have a very high standard before they have access to the financial system."

Facebook last month unveiled its plans for Libra, widely regarded as a challenger to dominant global player bitcoin. Expected to launch in the first half of 2020, Libra is designed to be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

Mnuchin said the US Treasury welcomes "responsible innovations" that can improve the efficiency of the financial system but added: "Our overriding goal is to maintain the integrity of the financial system and protect it from abuse."

'NATIONAL SECURITY ISSUE' 

He said US regulators have met with Facebook officials on this question, and how Facebook can protect against the new virtual coin being used for criminal activity.

"This is indeed a national security issue," the Treasury chief said.

Facebook, he added, must implement safeguards against the use of Libra for money laundering and terrorist financing and comply with other financial regulations.

Commenting on Facebook's claim that Libra could lower costs and help people without access to traditional financial services, Mnuchin said, "That's fine (but) they've got a lot of work to do to convince us they can get to that place."

Mnuchin's comments echoed concerns voiced by Federal Reserve Chairman Jerome Powell and regulators around the world, as well as by lawmakers set to open hearings this week on the plan by Facebook and its partners in the Libra project.

HEARING SET TUESDAY 

David Marcus, who heads Facebook's digital wallet and blockchain efforts, said in testimony prepared for delivery Tuesday that he expects regulators to carry out an extensive review of the Libra project.

"The time between now and launch is designed to be an open process and subject to regulatory oversight and review," Marcus was to say in his remarks, which were released by the Senate Banking Committee.

"We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals."

Marcus said that Libra, whose association will be based in Geneva, will be supervised by the Swiss Financial Markets Supervisory Authority, but would also register with the US Treasury's FinCEN (Financial Crimes Enforcement Network) to comply with anti-money laundering regulations.

Facebook "will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy," Marcus added.

The companies behind Libra include payment giants Visa, MasterCard and PayPal, as well as ride-hailing apps Lyft and Uber.

Central bankers around the world have said they would carefully study the proposed currency and last week US President Donald Trump weighed in.

"I am not a fan of bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," he said.

source: news.abs-cbn.com

US Fed to look 'carefully' at Facebook virtual coin Libra

WASHINGTON -- Federal Reserve chairman Jerome Powell said Tuesday the US central bank will be closely scrutinizing Facebook's newly announced cryptocurrency Libra with an eye toward potentially regulating the virtual coin.

Powell became the latest official to voice concern over the global virtual currency unveiled last week by Facebook and an array of partners which aims to lower transaction costs and bring more services to people without access to the banking system.

"We're looking at it very carefully," Powell said at an event sponsored by the Council on Foreign Relations. "Given the possible scale of it, I think that our expectations from a consumer protection standpoint, from a regulatory standpoint, are going to be very, very high."

The Libra coin plan, backed by financial and nonprofit partners, represents an ambitious new initiative for the world's biggest social network with the potential to bring crypto-money out of the shadows and into the mainstream.

But the plan has already prompted calls in Europe for close regulatory scrutiny and several US lawmakers have said they more information from Facebook.

Several analysts have said the new currency could create a regulatory conundrum due to the global reach of Facebook, which has more than 2 billion users.

Powell, speaking at the forum in New York, said that "authority for overseeing Libra is going to be in a number of places but I think the big picture is we're going to be looking really carefully at it."

Facebook said the new virtual coin would be overseen by a nonprofit Libra Association based in Geneva which would maintain a real-world asset reserve to keep its value stable.

source: news.abs-cbn.com

US Treasury again says China is not manipulating currency

WASHINGTON -- The US Treasury again found that neither China nor any other trading partners was manipulating its currency, according to the semi-annual report released Tuesday.

But Treasury called on the Asian economic giant to avoid allowing the renminbi to weaken persistently.

While the report said "direct intervention by the People's Bank of China in the last year has been limited," Treasury said in a statement that it "continues to urge China to take the necessary steps to avoid a persistently weak currency."

The closely watched report broadened the field of its scrutiny for potential currency manipulation, since a weak currency makes exports to the United States more competitive and could undermine Washington's current efforts to cut a soaring global trade imbalance.

Beginning with this report, the Treasury is assessing all US trading partners with annual trade surpluses in goods of more than $40 billion.

Based on trade in 2019, that standard covered 21 countries with nearly $3.5 trillion in goods trade with the United States, according to the report.

With the new expanded list, Treasury put nine trading partners, including China, on the "monitoring list" of countries "that merit close attention to their currency practices."

They are Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, and Vietnam. The latest report removed India and Switzerland from the list but added Ireland, Italy, Malaysia, Singapore and Vietnam.

"Treasury takes seriously any potentially unfair currency practices, and Treasury is expanding the number of US trading partners it reviews to make currency practices fairer and more transparent," US Treasury Secretary Steven Mnuchin said in a statement.

The report noted that China's currency had fallen 3.8 percent against the US dollar in the second half of last year, making it eight percent weaker over the last year. However, China only triggered one of the criteria used to determine whether a country merits close monitoring.

Germany remains on the watch list for a third year, and Treasury noted it has "the world's largest current account surplus," and a $68 billion trade surplus with the United States in 2018. 

While Germany has repeatedly been listed, like Italy and Ireland it is part of the eurozone and no longer has independent control over its currency or monetary policy, which is handled by the European Central Bank.

India and Switzerland were removed because for two consecutive reports they had both met only one of three criteria necessary for inclusion on the monitoring list.

While India had a significant bilateral surplus, Switzerland had a material current account surplus, according to the report.

source: news.abs-cbn.com

China promotes use of yuan among Southeast Asian nations

SHANGHAI—China published a five-year blueprint on Friday seeking economic and financial integration between southern Guangxi province and Southeast Asia, representing Beijing’s latest effort to promote international use of the yuan currency.

China’s state council, or cabinet, has agreed to build Guangxi, which borders Vietnam, into a financial gateway between the Association of Southeast Asian Nations (ASEAN) and China, the world’s second biggest economy, the People’s Bank of China (PBOC) said in a statement on its website.

As a key objective of the plan, China will promote the use of the yuan among ASEAN countries, with plans to facilitate cross-border trade settlement, currency transactions, investment and financing in the Chinese currency.

More specifically, China will encourage the use of yuan in its commodities trade with ASEAN, support yuan-denominated lending to projects in the region, seek to build offshore yuan markets and promote cross-border financial investments.

The plan, which spans five years until the end of 2023, was jointly published by 13 Chinese government agencies including the central bank, the foreign exchange regulator, the securities watchdog and the ministry of finance.

source: news.abs-cbn.com

Venezuela on edge as Maduro unveils raft of economic reforms

CARACAS - Uncertainty reigned in Venezuela on Saturday after President Nicolas Maduro unveiled a major economic reform plan aimed at halting the spiraling hyperinflation that has thrown the oil-rich, cash-poor South American country into chaos.

Ahead of a major currency overhaul on Monday, when Caracas will start issuing new banknotes after slashing five zeroes off the crippled bolivar, Maduro detailed other measures he hopes will pull Venezuela out of crisis.

Those measures -- revealed in a speech to the nation late Friday -- include a massive minimum wage hike, the fifth so far this year. 

But analysts say the radical overhaul could only serve to make matters worse.

"There will be a lot of confusion in the next few days, for consumers and the private sector," said the director of the Ecoanalitica consultancy, Asdrubal Oliveros. 

"It's a chaotic scenario."

'PURE LIE!' 

The embattled Maduro, a former bus driver and union leader, said the country needed to show "fiscal discipline" and stop the excessive money printing that has been regular in recent years.

The new currency, the sovereign bolivar -- to distinguish from the current, and ironically named, strong bolivar -- will be anchored to the country's widely discredited cryptocurrency, the petro.

Each petro will be worth about $60, based on the price of a barrel of Venezuela's oil. In the new currency, that will be 3,600 sovereign bolivars -- signaling a massive devaluation.

In turn, the minimum wage will be fixed at half a petro (1,800 sovereign bolivars), starting Monday. That is about $28 -- more than 34 times the previous level of less than a dollar at the prevailing black market rate. 

Maduro also said the country would have one fluctuating official exchange rate, also anchored to the petro, without saying what the starting level would be.

As it stands, the monthly minimum wage -- devastated by inflation and the aggressive devaluation of the bolivar -- is still not enough to buy a kilo of meat.

In the capital Caracas, residents were skeptical about the new measures.

"Everything will stay the same, prices will continue to rise," 39-year-old Bruno Choy, who runs a street food stand, told AFP.

Angel Arias, a 67-year-old retiree, dubbed the new currency a "pure lie!"

'PLOTS' 

The International Monetary Fund predicts inflation will hit a staggering one million percent this year in Venezuela -- now in a fourth year of recession, hamstrung by shortages of basic goods, and crippled by paralyzed public services.

Maduro blames the country's financial woes on opposition "plots" and American sanctions -- but admits that the government will "learn as we go along" when it comes to the currency redenomination.

His government pushed back Saturday against criticism of the economic reform plan.

"Don't pay attention to naysayers," Information Minister Jorge Rodriguez said. "With oil income, with taxes and income from gasoline price hikes... we'll be able to fund our program."

Electronic transactions are set to be suspended from Sunday to facilitate the introduction of the new notes. 

Oil production accounts for 96 percent of Venezuela's revenue -- but that has slumped to a 30-year low of 1.4 million barrels a day, compared to its record high of 3.2 million 10 years ago.

The fiscal deficit is almost 20 percent of GDP while Venezuela struggles with an external debt of $150 billion.

Venezuela launched the petro in a bid for liquidity to try to circumvent US sanctions that have all but stamped out international financing.

But there's a good reason the redenomination hasn't generated renewed hope or investor confidence: Venezuela has done this before.

Maduro's predecessor Hugo Chavez stripped 3 zeroes off the bolivar in 2008, but that failed to prevent hyperinflation.

Oliveros warned that the new bank notes will crumble "within a few months" if hyperinflation is not brought under control.

According to economist Jean Paul Leidenz, Venezuela is trying to emulate Brazil, which replaced its old cruzeiro currency with the real in the 1990s after the former was destroyed by hyperinflation.

But he said that will not work because of the government's fiscal indiscipline and a lack of financing.

CRYPTOCURRENCY 'SCAM'? 

Cryptocurrency rating site ICOindex.com has branded the petro a "scam," while the US has banned its nationals from trading in it. 

"Anchoring the bolivar to the petro is anchoring it to nothing," said economist Luis Vicente Leon, director at polling organization Datanalisis.

Right from the outset, it has not been clear how the petro would operate, nor what being backed by oil actually means.

Maduro's government is desperately grasping at straws to try to fix the country's economic meltdown.

Earlier this week, he announced a curb on heavily subsidized fuel in a bid to prevent oil being smuggled to other countries.

Subsidies would only be available to citizens registering their vehicles for a "fatherland card" -- which the opposition has decried as a mechanism to exert social control over opponents.

Fuel subsidies have cost Venezuela $10 billion since 2012, according to oil analyst Luis Oliveros, but without them, most people would not be able to buy fuel.

source: news.abs-cbn.com

Facebook bans ads for cryptocurrencies

WASHINGTON- Facebook says it is banning all ads related to cryptocurrencies in an effort to fight scams.

The social media giant said it is barring ads for "financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, and cryptocurrency."

Initial coin offerings or ICOs are a way for companies to raise funds by selling investors cryptographic assets.

Fraud is common in the world of red-hot digital currencies such as bitcoin.

This week, for instance, the US Securities and Exchange Commission shut down an initial coin offering by a Texas company called AriseBank.

AriseBank was accused of relying on celebrity endorsers such as boxer Evander Holyfield and social media to cheat investors out of $600 million of its goal of $1 billion for a currency it called "AriseCoin."

In a blog post announcing the news, Facebook product management director Rob Leathern hinted that Facebook may modify the new policy at some point to allow bona fide crypto-related businesses to advertise again.

"We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception," Leathern wrote. 

"That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith."

"This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve," he added.

source: news.abs-cbn.com

Bitcoin, an 'Uber' currency, not without risk

PARIS - Bitcoin, which this week soared to a new record high of more than $8,000, is the monetary equivalent of Uber, since it bypasses central bank regulation and could be attractive for financially fragile countries, economists say.

Nevertheless, it is precisely the lack of oversight that opens up the users of cryptocurrencies such as bitcoin to risks and dangers, analysts warn.

"Bitcoin? It's about 'Uber-ising' currency, about not having a central bank that decides the price," said Ludovic Subran, chief economist at credit insurer Euler Hermes, referring to Uber, the ride-hailing app that has set the cat among the pigeons in the taxi sector in recent years.

"Yes, it's exactly that: it bypasses a central regulatory authority. That's the genius of this invention," agreed Yves Choueifaty, founder of the Paris-based asset management firm Tobam, which this week launched the first European fund investing in bitcoin.

Bitcoin is not regulated, but is traded on specialist platforms. It has no legal exchange rate and no central bank backing it. Launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto, bitcoin is controlled and regulated by its community of users.

Investors are already referring to it as "digital gold", as the bitcoin soared to a new record high of more than $8,000 this week, a staggering rise in value from just under $1,000 at the beginning of the year.

"We have no need for central banks," said Yves Choueifaty, suggesting that institutional investors may be behind the recent sharp gains, even if insisted that there was "no bitcoin bubble."

The growing interest in bitcoin is catching mainstream attention: the CME Group of Chicago, one of the world's biggest exchanges, has decided to launch a bitcoin futures marketplace. And prestigious US universities are offering courses in blockchain technology, on which cryptocurrencies are based.

'DOLLARIZATION 2.0'

Virtual currencies could also prove attractive to economic players in countries such as Zimbabwe or Venezuela, whose fiat currencies have been ravaged hyper-inflation. Caracas, for example, has had to issued a new 100,000-bolivar bill, when just a year ago, the biggest-denomination banknote was 100 bolivars.

"Think of countries with weak institutions and unstable national currencies. Instead of adopting the currency of another country -- such as the US dollar -- some of these economies might see a growing use of virtual currencies. Call it dollarization 2.0," said the head of the International Monetary Fund, Christine Lagarde, recently.

Economists also suggest the bitcoin could be of interest to developing countries where individuals often find it easier to access the internet than traditional bank accounts.

Nevertheless, central banks and the big financial institutions are concerned that virtual currencies can be used for illicit purposes and are highly speculative by nature.

"It's the exact definition of a bubble," the head of Swiss banking giant Credit Suisse, Tidjane Thiam, warned recently in comments that immediately sparked an uproar on social media among bitcoin's supporters.

The head of the French central bank or Banque de France, Francois Villeroy de Galhau, warned in the summer: "People are using the bitcoin today are clearly doing it at their own risk and at their own peril."

'NO INTRINSIC VALUE'

Nobel laureate, Jean Tirole, also insisted that the current bitcoin boom was a "bubble".

"It's something that has no intrinsic value," he told AFP on the sidelines of a conference in Paris this week.

"It could collapse from one day to the next. I would be completely against French banks, for example, investing in bitcoin."

Euler Hermes economist Subran called on the financial authorities to make potential investors more aware of the risks.

"There's a lot of money to be made. And a lot of money to be lost," he said.

"We're seeing more and more people wanting to venture there, but they're not fully aware of the risk."

Bitcoin has regularly suffered abrupt falls, for example, in cases of friction between the members of the community who oversee it and the members who produce it, when the regulatory authorities issue any warnings, or if there are data hacks.

But more often than not, bitcoin quickly makes up any losses and some investors are predicting it will soon top the $10,000 level. Back in 2011, it had struggled to pass $1.

source: news.abs-cbn.com

Overcoming roadblocks, bitcoin takes flight again

PARIS - Bitcoin may be in for a sustained record run as it overcomes key obstacles, experts said Thursday after the cryptocurrency set a new record high.

Even bitcoin fans were plagued by doubts over the summer when Chinese regulators cracked down on exchanges trading the virtual currency and a dispute among developers gave birth to a new version, splitting the market.


In September, banking regulators in Beijing and Shanghai ordered local cryptocurrency exchanges to shut down.

But observers say they are now detecting a rethink by the Chinese authorities, causing bitcoin on Thursday to surge past the $5,000 level for the first time since its launch eight years ago.

Around 1530 GMT (11:30 p.m. Thursday in Manila) its value based on a basket of trading exchanges calculated by Bloomberg was $5,247.02, up from $4,829.29 late Wednesday.

This represents a rise of 400 percent this year alone.

UNCERTAINTY DIDN'T LAST

Should rumors reported in state media be confirmed, then what is by far the most well-known and traded of more than 1,000 so-called cryptocurrencies could soar to even greater heights, experts predict.

"There has been a period of uncertainty but that has not lasted. China represents more than 60 percent of trading and the question of their regulation, as everywhere, has made a bigger impact," said Greg Revenu, of Bryan, Garnier & Co.

The virtual currency is created through blockchain technology, which publicly records transaction details including the unique alphanumeric strings that identify buyers and sellers -- technology which is gaining increasing currency among banks and companies.

"Mining" the coins is a very profitable but long, expensive, and energy-intensive process requiring powerful servers.

Between 60 and 70 percent of new bitcoins are mined in China, where the local leader Bitmain has imposing infrastructure.

The bitcoin supply is capped at 21 million units, some 17 million of which have already been mined.

IT ONCE TRADED FOR CENTS

Beijing's crackdown saw bitcoin's price plunge some 40 percent before recovering, the latest move in its rollercoaster existence which began in 2009, when it was worth just a handful of cents.

Even at the start of this year it was worth 'only' $966.

Its volatility has led many financial observers to suggest the current bull run is another speculative bubble which could well lead to a corrective selloff.

Two Chinese trading platforms, Okcoin and BTC China, control about 22 percent of the global bitcoin market.

Bitcoin is not generally recognised as a currency -- lacking a home country, central bank or treasury -- although its real world use is constantly increasing.

Another key player in the crypto currency is Russia, where President Vladimir Putin on Wednesday spoke of a "risk" that virtual currencies -- often associated with so-called anonymous 'dark web' dealings -- could represent.

For Jonathan Gerardin, IT manager at Wavestone, "the summer was marked by different crises".

Gerardin noted that the currency split, coupled with China's crackdown, had dampened enthusiasm but "bitcoin has been able to overcome that and continue to progress, it has shown its resilience".

WHY NOT $100,000?

The rising use of blockchain -- a theoretically unhackable digital ledger technology -- is also viewed as keeping the digital cash's value buoyant, according to Revenu.

"Its value is totally marginal in the face of potential uses being put in place," he said.

That is a key reason why digital currencies have been winning supporters across the globe, from the United States to Japan via India but also Europe with some major financial names coming aboard.

For Neil Wilson, analyst with Etx Capital, "the prospect of Goldman Sachs trading bitcoin is also driving buying as this might give it a toehold on Wall Street that could bring it into the mainstream and attract fresh inflows of capital".

Wilson suggested the soaring value was linked to "reports indicating that China may be ready to allow trading again, albeit with tighter regulation".

Some converts say bitcoin's value could go to dizzy heights like $100,000 or even $500,000, although experts from Mirabaud Securities in Geneva said the commodity may now in a "bubble zone" which could burst.

But for now, Gerardin said, "there is nothing to suggest such a collapse".

source: news.abs-cbn.com

China's yuan joins elite club of IMF reserve currencies

China's yuan joins the International Monetary Fund's basket of reserve currencies on Saturday in a milestone for the government's campaign for recognition as a global economic power.

The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.

The IMF is adding the yuan, also known as the renminbi, or "people's money", on the same day that the Communist Party celebrates the founding of the People's Republic of China in 1949.

"The inclusion into the SDR is a milestone in the internationalisation of the renminbi, and is an affirmation of the success of China's economic development and results of the reform and opening up of the financial sector," the People's Bank of China said in a statement.

China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.

The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing's often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November's election.

China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.

Some China watchers also fear that Beijing's commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

U.S. Treasury Secretary Jack Lew said on Thursday the yuan was "quite a ways" from true global reserve currency status. The new IMF status recognises the "enormous" change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said.

"Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency," he said.

Capital Economics said inclusion of the currency in the IMF's SDR basket will have minimal impact on foreign demand for yuan assets, so "offers little support" for the currency.

"If anything, the risk is that official intervention to keep the renminbi stable ahead of its inclusion will subsequently be paired back, allowing for renewed deprecation," it said in a research note.

The IMF on Friday fixed the relative amounts of the five currencies in the basket for five years, based on their average exchange rates over the past three months. (Reporting by Nathaniel Taplin; Additional reporting by Ben Blanchard; Editing by Neil Fullick)

source: www.abs-cbnnews.com

7 tips to protect your BItcoins

MANILA -- A security software firm is urging Filipinos to learn the benefits and risks of Bitcoin before using the increasingly popular online currency.

In a statement, Kaspersky Lab noted how Bitcoin transactions are fast, taking around only 10 minutes to verify a transaction. It added that it is cheap and convenient, removing the need to maintain or pay for processing fees for a credit card company.

And similar to other money transfer services, it can be transferred from another person from halfway around the world in minutes and can be converted to traditional currencies.

Here in the Philippines, there is a growing community of Bitcoin enthusiasts called Bitcoin PH. An online exchange platform called BuyBitcoin.ph lets Filipinos have easier access to the online currency.

Kaspersky Lab, however, also mentioned some risks associated with the use of Bitcoin.

Since there is no central authority controlling it, there are no rules as fare as currency regulation goes, making Bitcoin highly volatile, it said, adding that central banks from different countries have issued public warnings about risks such as money laundering.

The Bangko Sentral ng Pilipinas has also yet to create regulations and measures to protect Bitcoin users.

On top of this, Kaspersky Lab said that Bitcoin transactions are irreversible, which means users must be more careful when using such currency. This, it said, may nurture fraudulent transactions, noting that there have been more than 30 instances of stolen or illegal transfers involving Bitcoin.

"While BItcoin can be a change-maker in money remittance and trading in the Asia Pacific region, people should be more wary about the risks associated with it. There are still countries in this region where no regulations exist to bind its users, and the fact that reversals cannot be done for Bitcoin transactions must make people more concerned about using the crypto-currency," said Bryan Sat, Kaspersky Lab's business development manager for the Philippines.

"Threats are not going away, it continuously evolves and hackers embrace every opportunity there is. With Bitcoin, hackers may find it easier to get into any user's online wallet and take their Bitcoin investments rather quickly," Sat added.

Having said these, Kaspersky Lab gave the following tips on how to keep your Bitcoins safe:

1. Don't keep them all in online banks or stock exchange services. There are newer institutions run by anonymous entities, so you have no guarantee that your money will be securely held or if you can have your money back if they are robbed.

2. Even if you consider a place that has a supposedly sterling reputation, again, there are more ways to breach a digital bank than a physical bank vault. Storing small amounts for current operations is okay, though.

3. Keep this offline wallet in a separate hard drive or a computer that is not connected to the Internet, only transferring Bitcoins to your Internet-connected device when you need to complete an online transaction.

4. Bitcoin users can certainly keep their money offline using free and widely available tools like Electrum or Armory that let you store your Bitcoins in heavily encrypted cases on your own hard drive.

5. Use a strong password with these or an open-sourced password-generating software.

6. Remember to back up your wallet so you don't end up throwing out all your life savings to the nearest landfill site.

7. Know where you keep them. James Howells, an IT worker from South Wales, once discarded an old hard drive containing his wallet which had around 7,500 Bitcoins inside or the equivalent of today's $6,235,000 (over P287 million).

source: www.abs-cbnnews.com