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Ksh at its weakest since it floated in 1994
Rank: Chief Joined: 1/13/2011 Posts: 5,964
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FUNKY wrote:If Switzerland can peg its currency with the Euro why cant we take the same step? Let's peg KES it to the Yuan, period!
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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FUNKY wrote:If Switzerland can peg its currency with the Euro why cant we take the same step? KES is not privileged currency... Our CBK does not have the mighty printing powers of the G10 currency printers. In short CBK printers are dot matrix models...
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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Cde Monomotapa wrote:FUNKY wrote:If Switzerland can peg its currency with the Euro why cant we take the same step? Let's peg KES it to the Yuan, period! I'd rather this in anticipation to 2015 reserve currency basket system representing all global regions as per their trade contribution and backed by gold. No more reserve currency issued from one nation. This is how to stop the ponzinomics...$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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hisah wrote:Cde Monomotapa wrote:FUNKY wrote:If Switzerland can peg its currency with the Euro why cant we take the same step? Let's peg KES it to the Yuan, period! I'd rather this in anticipation to 2015 reserve currency basket system representing all global regions as per their trade contribution and backed by gold. No more reserve currency issued from one nation. This is how to stop the ponzinomics... pegs never work, even SNBs wont work, the weakness around the KES is structural and needs a structured solution, as of march our trade gap was -76bn! wth did guys expect, infact i think the next 2 quarters are worse, i will get the data and post it here
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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I agree that pegs rarely work unless like the SNb you have the weaponry to enforce it. CBK must now think outside the box. Fx controls should temporarily be brought in while we have this EU crisis. In effect, CBK must control the amount of dollars that each bank and other fx dealers hold. It should also increase the pain thresholds in the discount window... This will buy us time to fix the fundamentals e.g. BoP Sehemu ndio nyumba
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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kizee1 wrote:hisah wrote:Cde Monomotapa wrote:FUNKY wrote:If Switzerland can peg its currency with the Euro why cant we take the same step? Let's peg KES it to the Yuan, period! I'd rather this in anticipation to 2015 reserve currency basket system representing all global regions as per their trade contribution and backed by gold. No more reserve currency issued from one nation. This is how to stop the ponzinomics... pegs never work, even SNBs wont work, the weakness around the KES is structural and needs a structured solution, as of march our trade gap was -76bn! wth did guys expect, infact i think the next 2 quarters are worse, i will get the data and post it here http://www.tradingeconom...m/kenya/current-account - current account deficit equivalent to 81.3 Billion KES in the first quarter of 2011 $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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Mainat wrote:I agree that pegs rarely work unless like the SNb you have the weaponry to enforce it.
CBK must now think outside the box. Fx controls should temporarily be brought in while we have this EU crisis. In effect, CBK must control the amount of dollars that each bank and other fx dealers hold. It should also increase the pain thresholds in the discount window...
This will buy us time to fix the fundamentals e.g. BoP SNB has tried this peg (EURCHF) since 2009 and the results are not very good to look at to date...
My reasoning is based on the yuan/RMB heading towards convertibility by 2015 or earlier depending on the G10 currency war fallout, there's nothing wrong by taking advantage of it. But as Kizee1 say, the structural issues are quite ugly at the moment...  $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Member Joined: 3/10/2008 Posts: 301 Location: Abu Dhabi
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I must say in the last 2-3 years I have come to admire the Chinese financial authoriries, despite all the noise about their controls.... a new order of "controlled capitalism"?? Pumped billions to lift the economy in 2009, started pro-actively hiking rates and controlling property market in the last 2 years to check inflation, now I saw they're using their offshore banks to encourage other institutions to maintain RMB deposits/reserves ->probably targeting RMB as a reserve ccy in the near future, as trades with China become unavoidable.
CBK is really caught between a rock and a hard place. They may have to resort to some form of exchange controls, similar to the ones in the 90's, on large tickets, as they run out of reserve ammunitions.
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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@toni - since there are oil price controls and the other day a price control bill was passed, well with all the price controls around CBK can also effect fx controls and tell guys to shove it... Bad idea, bad idea  $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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http://www.forexpros.com/currencies/usd-kes - 98.20 and counting... Going once, twice... gone! $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Hisah-short term suggestions on how to give Ksh some steel? I believe if we get to 110, we'll have stagflation with short-term T-bill topping 20%. Sehemu ndio nyumba
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Rank: Member Joined: 3/10/2008 Posts: 301 Location: Abu Dhabi
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With EURUSD having broken 1.35 support and DXY well above 78.00, this dollar strength is not relenting.
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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Mainat wrote:Hisah-short term suggestions on how to give Ksh some steel?
I believe if we get to 110, we'll have stagflation with short-term T-bill topping 20%. sell reserves?
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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tonicasert wrote:With EURUSD having broken 1.35 support and DXY well above 78.00, this dollar strength is not relenting. I believe the dollar squeeze has just started like in Sept 2008...
Look at the commodo currencies, totally knocked out today. And the commodities themselves oil, copper, gold et al are also taking the knock.
I'm shocked to see USDZAR has already broken above my 8.20 target in a span of 4 days. The USDSGD is equally moving fast.
With DXY rallying to 78, definitely funds are hurriedly being unwound on carry trades...
Is the PIIGS default drama just about to be announced... $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Member Joined: 3/10/2008 Posts: 301 Location: Abu Dhabi
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Emerging markets positions and commodities are bearing the brunt of sentiment deterioriation, even the CNH hasn't survived this one. Option vols are also breaking 2 years high to post-2008 levels.
Any CBK intervention at this point will just be diluted by the mkt, IMHO. But as soon as market settles (when??), they should aggressively intervene in the FX mkt.
Just a thought: Can CBK coordinate with IMF when mkts settle, and say borrow USD from them to intervene heavily in a bid to save the country from the effects of a weak KES, but at the expense of exchange losses (repayment)which may be mitigated by the size...
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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kizee1 wrote:Mainat wrote:Hisah-short term suggestions on how to give Ksh some steel?
I believe if we get to 110, we'll have stagflation with short-term T-bill topping 20%. sell reserves? IMF requires us to hold 3-4 months import cover before we can access its funding Sehemu ndio nyumba
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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99.25 paid, IMF shud go to hell! infact IMF are the 1s who put as here
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Rank: Veteran Joined: 6/17/2009 Posts: 1,621
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kizee1 wrote:99.25 paid, IMF shud go to hell! infact IMF are the 1s who put as here Seen that too,does CBK have much choice here?
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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kizee1 wrote:99.25 paid, IMF shud go to hell! infact IMF are the 1s who put as here As an exporter.. All I can say is OH HAPPY DAY!!!!!!!Mark 12:29
Deuteronomy 4:16
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