Interbank market news scan: Should the US be concerned about falling behind the “digital currency curve?” Bitcoin, Ethereum prices fall …

News you should be following. Follow the links …

China’s rapid development of its sovereign digital currency, the so-called digital yuan, is causing the United States to worry that it could fall behind in the race for financial technology innovation, analysts said. China digital currency: US ‘worried’ as it falls ‘behind the curve’ in race for financial innovation (koreatimes.co.kr)

Trading was muted overnight while markets await the latest views from central banks. The US Federal Reserve, the Bank of Japan and the Bank of England headline a cattle call of central banks due to deliver interest rate decisions this week. Markets stall ahead of Fed | CMC Markets

The US dollar is gaining ground on the other major currencies as the foreign exchange market reacts to rising Treasury yields. The prospect of inflation continues to dominate investors’ minds, as all the conditions appear to be in place for a massive rebound in economic activity that is likely to cause consumer prices to spike. Daily market commentary: The foreign exchange market reacts to rising Treasury yields (leaprate.com)

Despite banking services becoming increasingly digital and accessible through mobile devices, there are still 1.7 billion adults without an account at a financial institution. Although The World Bank’s 2017 report confirms some improvement in this regard, only 300 million individuals succeeded in overcoming this hurdle between 2014 and 2017. At this rate, the imbalance of financial access will remain a pressing problem for some time to come. DeFi Is the New Lemonade Stand (yahoo.com)

In 2021 the modern economic landscape is already beginning to shift. The growth of cryptocurrencies and decentralized finance (DeFi) has been a part of the discussion for years, but the reality of how it will impact securities trading is finally being realized. An increasing number of securities are now digitized, underpinned by distributed ledger technology (DLT) that provides the necessary tools that allow for faster, cheaper and ultimately more secure markets, regardless of asset type. The Rise of Digital Securities | Nasdaq

Cryptocurrency exchange rates as of 11:45 pm EST 16 March 2021 …

BTC/USD=55,332.10 ETH/USD=1,767.68

BTC/EUR=46,430.60 ETH/EUR=1,482.99

BTC/GBP=39,875.10 ETH/GBP=1,273.88

BTC/AUD=71,447.80 ETH/AUD=2,282.53

BTC/CAD=68,972.00 ETH/CAD=2,203.43

BTC/CHF=51,241.80 ETH/CHF=1,637.01

BTC/JPY=6,035,080.00 ETH/JPY=192,801.00

BTC/CNY=359,694.00 ETH/CNY=11,491.10

Source: OANDA

Interbank market scan: China’s interbank market rate drops; Bitcoin sees a little deceleration …

Links to news you should be following …

India’s foreign-exchange reserves surpassed Russia’s to become the world’s fourth largest, as the South Asian nation’s central bank continues to hoard dollars to cushion the economy against any sudden outflows. India FX Reserves Cross Russia to Become World’s 4th Biggest – Bloomberg

Currency tensions and currency crises are a side effect of many countries failing to manage in the new round of economic globalization that has taken place through increasing flows of multilateral trade and investments that have created a world of currency trades causing economies to depend on global reserve currencies, mainly the US Dollar. Science against Myth (msn.com)

During the past month, the total value locked (TVL) in the Bancor Protocol has more than doubled, surpassing the $1.6 billion mark. Bancor, which serves as a liquidity protocol that enables automated, decentralized exchange, reveals that it managed to break into the top 10 projects in terms of TVL and now generates “the fifth highest revenue” of any protocol on Ethereum (as of March 13, 2021). decentralized finance – Bing News

To add more value to the network’s end-users and keep FinNexus at the industry’s cutting edge, its team has been working extremely hard to introduce new features. FinNexus has been developing its ecosystem on all fronts, expanding an established partnership with ChainLink, striving to add a new decentralized product, and introducing an algorithmic stablecoin-based liquidity pool to its platform.  FinNexus developments take its decentralized options platform to the next level | KnowTechie

The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China’s interbank market, fell 10.5 basis points to 2.14 percent Tuesday.China’s overnight Shibor interbank rate falls Tuesday – Xinhua | English.news.cn (xinhuanet.com)

Cryptocurrency exchange rates as of 8:35 am EST …

BTC/USD=57,494.80 ETH/USD=1,792.44

BTC/EUR=48,177.40 ETH/EUR=1,501.96

BTC/GBP=41,325.00 ETH/GBP=1,288.34

BTC/AUD=74,221.30 ETH/AUD=2,313.90

BTC/CAD=71,715.70 ETH/CAD=2,235.79

BTC/CHF=53,398.50 ETH/CHF=1,664.74

BTC/JPY=6,274,470.00 ETH/JPY=195,611.00

BTC/CNY=373,759.00 ETH/CNY=11,652.20

Source: OANDA

Interbank market scan as of 11:03 am AST: Central banks, foreign exchange

Currency pairsExchange Rate as of 11:07am AST 28 January 2021Exchange Rate as of 12:10 pm AST 29 January 2021
AUD/USD0.76810.7695
USD/CAD1.27741.2766
USD/CNY6.48226.4291
EUR/USD1.21181.2148
USD/INR73.050072.8335
GBP/USD1.37151.3722
USD/JPY104.0600104.7100
USD/MXN20.700020.2232
USD/DKK6.15546.1206
USD/NOK8.62428.5291
Source: Reuters

The Chinese yuan exhibited increased strength against the U.S. dollar. This may be due in part to decision of the People’s Bank of China to be more hawkish on interest rates and modifying the interbank market rate of the yuan to reflect tightening liquidity. (See links to two articles below).

News from the federal government …

Yesterday, the White House released the following statement addressing a call between members of the National Security Council and the European Commission:

“National Security Advisor Jake Sullivan spoke by phone today with European Commission President Ursula von der Leyen’s Head of Cabinet Bjoern Seibert. Mr. Sullivan underscored President Biden’s commitment to the transatlantic alliance and his intention to repair and revitalize the U.S.-EU partnership, including our trade and investment relationship. They discussed the importance of close U.S.-EU cooperation on the COVID-19 pandemic and global health security, as well as the global economic recovery and climate change. They also agreed to work together on issues of mutual concern, including China and Turkey.”

In other news: The markets ….

Julian Evans-Pritchard, Senior China Economist at Capital Economics suggests that the People Bank of China (PBOC) could be delivering a hawkish signal, in light of the recent surge in the interbank rates. PBOC: Surge in interbank rates is a hawkish signal – Capital Economics (fxstreet.com)

China’s yuan firmed on Thursday, as tight interbank liquidity heading into Lunar New Year pushed money markets rates higher, though gains were limited as a global stock market rout increased safe-harbour demand for assets like the dollar. China’s yuan inches up as tight liquidity pushes interbank rates higher | Nasdaq

Sweden’s central bank said it had agreed with the U.S. Federal Reserve to extend a $60 billion swap agreement signed during spring last year until Sept. 30 this year. Sweden’s Central Bank Extends Swap Arrangement With U.S. Federal Reserve | Investing News | US News

Bank of America was ringing alarm bells over equities on Friday, as it warned a correction is looming. Get ready for a 10% stock drop, driven by the 3 ‘Rs,’ warns Bank of America (msn.com)

The Central Bank of Nigeria plans to obtain all the necessary approvals required to start the operations of a proposed commodities exchange within the next 90 days, Governor Godwin Emefiele said on Thursday. Nigeria Commodities Exchange to Start in 90 Days to Help Stabilize Food Prices – Bloomberg

The value of Dogecoin, a joke cryptocurrency that launched back in 2013, hit record levels on Thursday. Its price rose by more than 800 percent, reaching around $0.082, which raised its market value to around $7 billion, according to Coindesk, which monitors cryptocurrency prices. Dogecoin Price Tracker, Update as Cryptocurrency Value Skyrockets (msn.com)

Robinhood has restricted trading in cryptocurrencies a day after blocking new purchases of 13 stocks amid “extraordinary market conditions,” the app said. Robinhood Blocks Cryptocurrency Trading, Blames ‘Extraordinary Market Conditions’ (msn.com)

“Guys,” he told them, “I don’t know if bitcoin goes lower next month, but I think over the course of time, bitcoin will be higher.” To be more exact, Denier predicts the cryptocurrency will surge to $US55,000 per coin by the end of 2021, a 70% increase from its current price of around $US32,200. Webull CEO Anthony Denier predicts Bitcoin will surge to $55,000 by the end of 2021. He told us why he’s bullish on the cryptocurrency long-term. (msn.com)

Interbank news scan: Latest global central bank and foreign exchange news …

The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China’s interbank market, increased 6.3 basis points to 1.738 percent Friday. Source: Xinhuanet

Some of the world’s biggest banks are urging a US judge not to immediately terminate the London Interbank Offered Rate (Libor) after a group of borrowers filed suit claiming the benchmark was the work of a “price-fixing cartel.” Source: BusinessWorld

How do you wean everyone from asset managers and traders to corporate treasurers off derivatives that are so ubiquitous, they’ve become part of the fabric of the financial system? Source: Bloomberg

Data from the Central Bank of Kenya (CBK) covering the lead up to Friday showed that daily interbank rate was on a rising trend, sending the average near the 6.29 per cent that was last seen in April 2020. Source: Business Daily

On January 15th, the midpoint of RMB exchange rate in the interbank foreign exchange market is: 1 US dollar to RMB 6.4633, 1 euro to RMB 7.8549, and 100 yen to RMB 6.2263. Source: SMM News

Price of the Eastern Caribbean Dollar …

How to read the chart:

XCD/USD: If you come to the United States with one Eastern Caribbean Dollar (XCD)and wish to sell it for a US dollar (USD), the market price is 0.37037 USD.

USD/XCD: If you take a US dollar (USD) to a participating Eastern Caribbean nation and wish to sell it for a Eastern Caribbean Dollar (XCD), the market price is 2.70 XCD.

As of 6:40 am AST this is the price of the Eastern Caribbean Dollar in various currencies:

XCD/USD=0.37037 USD/XCD=2.70

XCD/GBP=0.27581 GBP/XCD=3.62517

XCD/EUR=0.30526 EUR/XCD=3.27557

XCD/PLN=1.36501 PLN/XCD=0.73179

XCD/TRY=2.89327 TRY/XCD=0.34509

XCD/JPY=38.57 JPY/XCD=0.02592

XCD/XAF=200.284 XAF/XCD= 0.00499

XCD/TTD=2.46504 TTD/XCD=0.39101

XCD/BBD=0.74074 BBD/XCD=1.35000

XCD/JOD=0.26259 JOD/XCD=3.80818

XCD/CHN=2.42224 CHN/XCD=0.41276

Source: OANDA

Political/Legal Events impacting Eastern Caribbean Dollar:

U.S. awaits release of unemployment report

The U.S. Department of Labor is scheduled to release today its jobs situation report which will provide the U.S. and economies trading with the U.S. with insights into the American economy and its ability to consume exports.

Source: U.S. Department of Labor

10:37 am 13 November 2020, Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of 10:37 am EST, 13 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76327 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30996 CAD

CAD/USD=0.76327   USD/CAD=1.30996

CNH/USD= 0.15112   USD/CNH=6.61616

EUR/USD= 1.17938   USD/EUR=0.84780

DKK/USD =0.15838     USD/DKK=6.31214

NGN/USD= 0.00262    USD/NGN=380.053

JPY/USD=0.00950      USD/JPY=105.23

INR/USD=0.01340       USD/INR=74.4783

JMD/USD=0.00671     USD/JMD=145.880

GYD/USD=0.00469       USD/GYD= 204.829

GHS/USD=0.17098     USD/GHS= 5.81812

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00909       USD/KES= 108.088

Source: OANDA

Major political/legal event in the United States

Yesterday in attempt to address attacks on American national security, President Donald J. Trump issued an executive order prohibiting transactions in publicly traded securities of Chinese military companies.  President Trump argues that capital raised via transactions in the securities of these companies is eventually channeled into financing improvements in Chinese military intelligence gathering.

Source:  Executive Office of the President

What does the narrative of fair trade with China mean?

This morning I watched the Fox Business Network‘s Mornings with Maria.  They have been featuring news clips of an interview that U.S. Secretary of State Mike Pompeo had with host Maria Bartiromo where he criticizes China’s trade policy toward the United States and warns Americans of the Chinese intent to steal American intellectual property and Americans’ personal information.  The United States has been making it clear for years that it is unhappy with what it describes as an imbalance in trade between the two nations.

China has a potentially large consumer market, its emergence stymied in part to its current status as a creditor nation where it finances other nations, including the United States versus living off of the dead aid provided by western nations as part of their policy of noblesse oblige toward emerging, lesser developed countries.  In addition, given its growing economic power, it is easily in a position to influence economic affairs in southeast Asia.  As a provider of inexpensive telecommunications equipment it has been able to enter Europe’s telecommunications market providing competition for American made telecommunications products.

But at the heart of the American narrative may be the fear that the Anglo-American world view or philosophy is being challenged by an alternative Chinese view that, if not held under control, will replace the Anglo view thus making the current American narrative on political economy i.e. the greatness of the republican form of government combined with a free market, less attractive for leadership in other nations to use the American model for governing their domestic and foreign trade affairs.

Pompeo and other American leaders have been using the media to signal to Americans that China’s actions are a threat to the American economy thus a threat to the American way of life.  I can see the broad strokes.  For example, if China continues to lock the US out of additional trading opportunities in China and can price the US out of European and other Asian technology and manufacturing markets, America’s wealth and trade influence would shrink and the US would be forced to become more self-reliant.  America, facing a challenged supply chain, would see shortages and increasing prices for goods and services thus the threat to the American way of life.

Pompeo also describes China’s activity as a threat to American democracy.  That threat I don’t buy into and I see it more as a jingoistic ploy than anything else.  Democracy refers to a citizen’s ability to participate in the process whereby political leaders are selected.  Pompeo has yet to state his case in a cogent manner.  He has insinuated that China has deployed an influence campaign targeting voters and elected officials alike but has provided no specifics.

In addition, the terms fairness and balance are continuously uttered, likely part of the jingoism campaign, as Americans tend to conflate fairness and balance with democracy.  A fair and balanced trade relationship between two countries has nothing to do with how the leaders in each respective country are chosen.  Americans should be asking themselves and their leaders why connecting these points creates such a sound political narrative that US electorate would have no other choice but to support any legal initiatives or actions that promote escalated tensions.

And the legal actions and initiatives are being turned up.  The Justice Department recently told PBS News that 60% of its trade cases are against China and that its actions against China are more in line with stopping illegal activity versus expressing an intellectual bias.

I see law as the codification of an originating philosophy transmitted via a narrative and  refined by politics and policy.  What is missing here is the jurisprudence.  For the citizen to properly understand the government’s legal actions against China trade policy, the focus has to come off of messages that conflate democracy, fairness, and balance, and look for the philosophy that is being promoted.  Conflation promoted by government officials should open up the citizens’ minds to questions about the mismatch between the politics, the policy, and the messaging.

Getting to the why is critical.