Archive for April 2009

Norway Krone on the Rise

April 30, 2009

Noway’s krone has been enjoying time in the glow of the limelight, as currency markets have been increasingly looking to it as a safe haven currency.

Up to now, it is always the Swiss Franc, the yen and the US dollar that have been seen as the safe haven currencies, but this is no longer the case. We know why the dollar and yen have been risky in recent times, but the Swiss Franc has also had its position weakened by the Swiss National Bank’s decision to step in and weaken the currency by force.

Now, traders have been looking for a more reliable source. The Norway krone has stepped in, with a country that has a healthy current account surplus and economy forecasts certainly less poor than other global economies.

Some currency watchers have been less positive about the krone – after all, what about its relationship with oil? The commodity is Norway’s main export, and therefore the price of a barrel can affect the strength of the currency.

US Dollar Weakens Amid Good Vibes

April 29, 2009

That was quick.  Apparently we can all stop panicking about catching pig flu.  Well, at least it’s now going to be possible to contain after all.  The World Health Organization has now announced that basically it wasn’t as bad as they thought.

The markets are certainly looking interesting where the US dollar and yen are concerned – both have weakened for the the second day in a row.  This is partly thanks to the better news regarding the flu virus, but also because news from South Korea and New Zealand.  The Bank of South Korea has released data showing their current account surplus has risen to $6.65 billion in the last month – which is almost double the amount of February.  New Zealand exports are up too – up 17 per cent since February.  Asian stocks have also gained ground – thanks to risk appetite or better economy hopes?

Any sign of improvement where the US economy is concerned, and investors will feel much more comfortable to get involved.

So overall, things looking up?  Maybe they are!

Pigs in the Spotlight

April 28, 2009

Pigs.  Not the prettiest animal on the planet but they are one of Nature’s creatures and certainly prettier than some others!  At the moment they are rather in the negative spotlight thanks to a spot of flu.

The virus which originated in Mexico is claiming more lives and is causing panic around the globe.  Governments are issuing warnings not to travel to Mexico and affected areas in North America, and pork products from Mexico are being banned in various countries.

Travel and hotel shares are down, and soy and corn futures are also taking a hit.

The only area which is looking set for improvement is the drugs industry – anti-viral pharmaceuticals are set to get a good round of sales and people stock up on defense against the flu.

A Japanese analyst said in the BBC that the bottom to the world economy has been been “ruined by pigs”.  Is he right or is this a short-term hit for the markets?  Will the virus have a lasting damaging effect on the global economy?

Swine Flu Affects Stocks

April 27, 2009

Until perspective is possible as to what the swine flu really means for the world, it would seem that world financial markets are going to react rather strongly. So far, Asian stocks have dropped and the leisure and transport industries have taken a knock. The same is likely to happen in Europe. Economists are already saying that the swine flu, which has killed 103 people in Mexico, is going to hinder the recent upturn in the markets and early signs of recovery from the world recession.

Certainly, a cautious reaction was noted on markets, as rumours began spreading that the flu might reach pandemic status.

Lest we forget Hong Kong: the city suffered under the SARS outbreak around six years ago, and its negative effect on the economy there. Futures and stocks fall – unless you’re talking pharmaceuticals. This area looks set to rise as governments order stockpiles of drugs such as Tamiflu. In Britain around half the population is now catered for, and pharmacists are ready to hand out drugs.

The FTSE 100 index is set to start lower. Futures on the S&P’s 500 index fell 1.7 per cent. The British pound weakened to $1..4662 and the euro also fell.

AAA Rating at Risk for UK

April 24, 2009

It is, one supposes, a case of the inevitable.

The two main credit rating agencies – Moody’s and S&P’s – are placing the UK under review for its sovereign credit rating.  Currently the country has the highest available rating of AAA but this is now under threat of being lowered.

Spain, Ireland, Portugal and Greece have already had theirs lowered.

Why is there cause for concern?  The reason is down to Tuesday’s Budget announcement, in which it was  made clear that borrowing in the UK would be sky high, reaching £1.4 trillion in the next five years.

The news has of course had a further effect on the British pound, which weakened against the dollar and the yen.  Meanwhile the Euro is seeing strength on the back of news that the economy in the Eurozone is showing signs of recovery.

Budget Divides

April 23, 2009

Budget time!

Predictions for the UK economy were slammed by opposition parties – no surprises there – but Mr Darling’s startling forecast of growth, by 3.5% by 2011, did seem a tad optimistic. He insisted however that this was “within outside forecasts”..

Borrowing is also set to increase yet further, to a record £175bn, and many are concerned about the wealth and confidence of the country in the time to come. Did the speech have a negative effect on the British pound? Of course it did, though it was unlikely to be the only factor affecting the currency market – but it did trade at 89.62p to the euro afterwards.

So a mixed bag to choose from when it comes to making our minds up in our feelings about the future of the UK’s economy. Take your pick – all sunshine and positive growth, or maybe doom and gloom is more your stance.

RBS hikes interest rates

April 22, 2009

Have you noticed something different with your credit card lately? Noticed a massive hike in the interest rate payments you’re required to make? If your card is from one of around 28 card providers, you will have been affected by one or two changes in the last 12 months to February.

And not just small changes…..RBS Group, for example, which own credit cards from Natwest and Mint as well as RBS have hiked interest rates by a whopping 31 per cent to 16.9 per cent. One one year ago, said providers had a meeting with the Government, after which they promised to take a softer approach towards customers. Clearly, they are not doing as they said…but why?

RBS has claimed that the reason for their rate changes (despite the fall in inflation) was to keep up with their competition. Not good according to consumer watchdogs. And probably RBS customers too.