What does it mean when a "country intervenes in the currency market"?

xmasdobo

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Quote from: jjacob on October 15, 2014, 08:18:52 PM

Quote from: sidhujag on October 14, 2014, 10:02:54 PM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

NO its a race to bottom its a currency war...

It is a race no country can win.

It's obvious there are going to be wars to "solve this". When countrie are on economical dead ends, wars are manufactured. This massive debt has no happy ending.

sidhujag

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Quote from: Window2Wall on October 20, 2014, 01:21:51 AM

Quote from: sidhujag on October 19, 2014, 10:31:02 PM

Judging by the fact that there is only $1.3 Trillion USD in circulation I hardly think that is the truth. The intervention that was big $101 billion was the one shot and th ebig one.. but normally around japan open they openly sold a few million on the open market.. but it doesnt add up to much compared to the big intervention.

You need to remember that the majority of US dollars available are not in "hard currency/paper" form but rather is in "digital" form. You also need to remember that trillions of dollars worth of dollars are traded every day throughout the world.

Take the stock market for example, there are close to hundreds of billions of dollars worth of stocks traded on a daily basis however none of it actually has physical cash change hands.

IIRC the amount of dollars traded on forex markets is in the trillions of dollars per day, however I am having trouble finding a source on this

Its $5 trillion a day from derivatives etc.. yea alot of those are IOUs on margin.

I doubt boj works on margin..

Window2Wall

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Quote from: sidhujag on October 19, 2014, 10:31:02 PM

Judging by the fact that there is only $1.3 Trillion USD in circulation I hardly think that is the truth. The intervention that was big $101 billion was the one shot and th ebig one.. but normally around japan open they openly sold a few million on the open market.. but it doesnt add up to much compared to the big intervention.

You need to remember that the majority of US dollars available are not in "hard currency/paper" form but rather is in "digital" form. You also need to remember that trillions of dollars worth of dollars are traded every day throughout the world.

Take the stock market for example, there are close to hundreds of billions of dollars worth of stocks traded on a daily basis however none of it actually has physical cash change hands.

IIRC the amount of dollars traded on forex markets is in the trillions of dollars per day, however I am having trouble finding a source on this

sidhujag

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Quote from: santaClause on October 19, 2014, 11:00:04 AM

Quote from: sidhujag on October 19, 2014, 03:16:23 AM

Quote from: BTCmoons on October 18, 2014, 11:33:51 PM

Quote from: sidhujag on October 18, 2014, 06:59:56 PM

Quote from: scarsbergholden on October 18, 2014, 07:36:36 AM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

Most will still follow a hands-off policy. When a currency market is intervened in, the impact is almost always temporary as intervention only slows the appreciation of the currency not reverses it over the long term.

well boj has caused usdjpy to bottom out... and eurchf is holding above 1.2 for years now... getting pretty cose but I agree... however with jpy i think they will enter a period of inflation (maybe hyper inflation) because of what they did.. i think instead of jpy being so strong it will become super weak because of the choices they made.. there is no happy between now.. they went to extreme measures to do major interventions and now rate is climbing but it will either fall back down or go through the roof to hurt their economy again.

Japan has been going through a period of deflation for over a decade now. They are in dire need of inflation. The Japanese government has purchased hundreds of billions of dollars (if not trillions of dollars) over the past 10+ years but the yen still appreciated against the dollar from trading at ~120 yen per dollar to less then ~80 yen per dollar

Preach it to the choir. Like I havent seen a chart? They messed up by signing the plaza accord. Now they are backtracking and made mistakes by intervening... that is the essence of the convo not dire need for inflation... they get more inflation than they can handle

btw your number are off they didnt buy hundreds of billions of dollars.. that is a lie. Give me a link.

The amount of intervention are probably understated. In October 2011 the JCB (japan central bank) purchased ~$100 billion of dollars to weaken the yen in one day and purchased ~$20 billion of dollars in early November 2011.

Source: http://www.reuters.com/article/2012/06/01/us-japan-economy-azumi-idUSBRE85003L20120601

Quote

BOJ UNDER PRESSURE AGAIN

Tokyo spent a record 8 trillion yen ($101 billion) in unilateral intervention into the currency market last October 31, when the dollar hit its record low against the yen, and another 1 trillion yen in early November on undeclared forays into the market. Authorities have stayed out of the market since then.

I would say that if they spent that much over the course of a few weeks then it would be easy to assume that they purchased a trillion dollars over the course of a decade.

Judging by the fact that there is only $1.3 Trillion USD in circulation I hardly think that is the truth. The intervention that was big $101 billion was the one shot and th ebig one.. but normally around japan open they openly sold a few million on the open market.. but it doesnt add up to much compared to the big intervention.

santaClause

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Quote from: sidhujag on October 19, 2014, 03:16:23 AM

Quote from: BTCmoons on October 18, 2014, 11:33:51 PM

Quote from: sidhujag on October 18, 2014, 06:59:56 PM

Quote from: scarsbergholden on October 18, 2014, 07:36:36 AM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

Most will still follow a hands-off policy. When a currency market is intervened in, the impact is almost always temporary as intervention only slows the appreciation of the currency not reverses it over the long term.

well boj has caused usdjpy to bottom out... and eurchf is holding above 1.2 for years now... getting pretty cose but I agree... however with jpy i think they will enter a period of inflation (maybe hyper inflation) because of what they did.. i think instead of jpy being so strong it will become super weak because of the choices they made.. there is no happy between now.. they went to extreme measures to do major interventions and now rate is climbing but it will either fall back down or go through the roof to hurt their economy again.

Japan has been going through a period of deflation for over a decade now. They are in dire need of inflation. The Japanese government has purchased hundreds of billions of dollars (if not trillions of dollars) over the past 10+ years but the yen still appreciated against the dollar from trading at ~120 yen per dollar to less then ~80 yen per dollar

Preach it to the choir. Like I havent seen a chart? They messed up by signing the plaza accord. Now they are backtracking and made mistakes by intervening... that is the essence of the convo not dire need for inflation... they get more inflation than they can handle

btw your number are off they didnt buy hundreds of billions of dollars.. that is a lie. Give me a link.

The amount of intervention are probably understated. In October 2011 the JCB (japan central bank) purchased ~$100 billion of dollars to weaken the yen in one day and purchased ~$20 billion of dollars in early November 2011.

Source: http://www.reuters.com/article/2012/06/01/us-japan-economy-azumi-idUSBRE85003L20120601

Quote

BOJ UNDER PRESSURE AGAIN

Tokyo spent a record 8 trillion yen ($101 billion) in unilateral intervention into the currency market last October 31, when the dollar hit its record low against the yen, and another 1 trillion yen in early November on undeclared forays into the market. Authorities have stayed out of the market since then.

I would say that if they spent that much over the course of a few weeks then it would be easy to assume that they purchased a trillion dollars over the course of a decade.

sidhujag

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Activity: 2044

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Quote from: BTCmoons on October 18, 2014, 11:33:51 PM

Quote from: sidhujag on October 18, 2014, 06:59:56 PM

Quote from: scarsbergholden on October 18, 2014, 07:36:36 AM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

Most will still follow a hands-off policy. When a currency market is intervened in, the impact is almost always temporary as intervention only slows the appreciation of the currency not reverses it over the long term.

well boj has caused usdjpy to bottom out... and eurchf is holding above 1.2 for years now... getting pretty cose but I agree... however with jpy i think they will enter a period of inflation (maybe hyper inflation) because of what they did.. i think instead of jpy being so strong it will become super weak because of the choices they made.. there is no happy between now.. they went to extreme measures to do major interventions and now rate is climbing but it will either fall back down or go through the roof to hurt their economy again.

Japan has been going through a period of deflation for over a decade now. They are in dire need of inflation. The Japanese government has purchased hundreds of billions of dollars (if not trillions of dollars) over the past 10+ years but the yen still appreciated against the dollar from trading at ~120 yen per dollar to less then ~80 yen per dollar

Preach it to the choir. Like I havent seen a chart? They messed up by signing the plaza accord. Now they are backtracking and made mistakes by intervening... that is the essence of the convo not dire need for inflation... they get more inflation than they can handle

btw your number are off they didnt buy hundreds of billions of dollars.. that is a lie. Give me a link.

BTCmoons

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Quote from: sidhujag on October 18, 2014, 06:59:56 PM

Quote from: scarsbergholden on October 18, 2014, 07:36:36 AM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

Most will still follow a hands-off policy. When a currency market is intervened in, the impact is almost always temporary as intervention only slows the appreciation of the currency not reverses it over the long term.

well boj has caused usdjpy to bottom out... and eurchf is holding above 1.2 for years now... getting pretty cose but I agree... however with jpy i think they will enter a period of inflation (maybe hyper inflation) because of what they did.. i think instead of jpy being so strong it will become super weak because of the choices they made.. there is no happy between now.. they went to extreme measures to do major interventions and now rate is climbing but it will either fall back down or go through the roof to hurt their economy again.

Japan has been going through a period of deflation for over a decade now. They are in dire need of inflation. The Japanese government has purchased hundreds of billions of dollars (if not trillions of dollars) over the past 10+ years but the yen still appreciated against the dollar from trading at ~120 yen per dollar to less then ~80 yen per dollar

sidhujag

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Activity: 2044

Merit: 1005

Quote from: scarsbergholden on October 18, 2014, 07:36:36 AM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

Most will still follow a hands-off policy. When a currency market is intervened in, the impact is almost always temporary as intervention only slows the appreciation of the currency not reverses it over the long term.

well boj has caused usdjpy to bottom out... and eurchf is holding above 1.2 for years now... getting pretty cose but I agree... however with jpy i think they will enter a period of inflation (maybe hyper inflation) because of what they did.. i think instead of jpy being so strong it will become super weak because of the choices they made.. there is no happy between now.. they went to extreme measures to do major interventions and now rate is climbing but it will either fall back down or go through the roof to hurt their economy again.

scarsbergholden

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Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

Most will still follow a hands-off policy. When a currency market is intervened in, the impact is almost always temporary as intervention only slows the appreciation of the currency not reverses it over the long term.

sidhujag

legendary

Activity: 2044

Merit: 1005

Quote from: jjacob on October 15, 2014, 08:18:52 PM

Quote from: sidhujag on October 14, 2014, 10:02:54 PM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

NO its a race to bottom its a currency war...

It is a race no country can win.

The one with the biggest/smartest military will win. For now.

jjacob

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Quote from: sidhujag on October 14, 2014, 10:02:54 PM

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

NO its a race to bottom its a currency war...

It is a race no country can win.

sidhujag

legendary

Activity: 2044

Merit: 1005

Quote from: jjacob on October 14, 2014, 09:40:39 PM

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

NO its a race to bottom its a currency war...

jjacob

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Activity: 1554

Merit: 1026

★Nitrogensports.eu★

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

The problem is what happens when other countries manipulate the foreign currency exchange rate. Do they still follow an off-hands policy or do they intervene in the market?

sidhujag

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Activity: 2044

Merit: 1005

Quote from: BTCmoons on October 13, 2014, 10:33:37 PM

Quote from: sidhujag on October 13, 2014, 10:21:52 PM

Quote from: funtotry on October 11, 2014, 11:24:35 PM

Quote from: sidhujag on October 09, 2014, 09:47:52 PM

Quote from: redHeadBlunder on October 09, 2014, 02:08:42 AM

Quote from: sidhujag on October 09, 2014, 01:13:06 AM

Quote from: redHeadBlunder on October 09, 2014, 12:57:42 AM

Quote from: sidhujag on October 08, 2014, 02:44:33 PM

Intervention always ends up hurting more than it helps... it fakes demand similar to QE and all other forms of manipulation... it will come back to bite. If it moved up too far or down too far.. tough loss your decision to sign plaza accord creating a deflationary spiral for everyone else other than USD.

I think QE is worse then intervention. QE is determined to be long term manipulation and is very difficult and time consuming to unwind. The effects of QE will also not be immediately known.

Intervention on the other hand takes effect immediately and can easily be reversed by intervening in the other direction (or can simply cease intervening)

true... just a form of intervention obviuosly qe is worse or else us would have just done a normal intervention and used profits if any to bail ppl out etc but they needed money right away so.

Currency intervention only works when other countries are not intervening to make their currency weak as well. If that were to happen then the federal reserve would simply be selling euros to the ECB. QE will be necessary when many countries are attempting to intervene in credit markets, although it is much more complicated

No intervention is always against usd or eur.. usd and eur... Chf is the only one doing it vs eur because that is the major trade partner.. There is a currency war going on and it is a precursor to a real war(last stage)

Intervention is usually done "against" the local currency that the central bank is attempting to manipulate. Much of the trading via intervention is done against the dollar and the euro because they are the most heavily traded currencies however the intervention should affect the local currency against all currencies

yup and because those are the ones used across the world.. to drive exports local currency has to devalue however the swap rates allow carry trades against them thus they fight uphill battle.. Its $4 trillion everyday that you must fight... pretty much fruitless unless you want to lose trust in the system which is what is happening with everyone racing tot he bottom..

Not all countries have a "weak local currency" currency policy. Some will let the currency freely float against other currencies regardless of what the market does. The only currencies that will have the problem of being too strong are countries that have net exports as their currency will naturally get stronger as they sell products overseas, bring the profits home and buy the local currency.

yes obviously, problem is alot of the top economies rely on net exports to US/CHINA/EUROPE and thus it really is a big issue and a war going on behind the scenes.