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These Four Currency Pegs Are Most Likely To Fall

Tyler Durden's picture




 

Ever since Kazakhstan stormed onto the radar screens of a whole host of mainstream financial market commentators who might not have previously known that there was a place called Kazakhstan, everyone wants to know which currency peg will fall next. 

Over the past week, we’ve taken a look at the riyal, the dirham, and of course, the Hong Kong dollar. Below, find a new chart from Bloomberg which attempts to show which pegs are most vulnerable based on the following six statistics: 1) Oil rents as a percent of GDP; 2) the current account balance as a percent of GDP; 3) external debt as a percent of GNI; 4) total reserves in terms of months of imports; 5) total reserves as a percent of external debt; 6) the change in the real effective exchange from 2010 to 2014. 

 

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Fri, 08/28/2015 - 18:09 | 6483222 alexcojones
alexcojones's picture

Just watched a guy get paid out $20K in green money here in Kodiak.

End of season crewman check... about normal

Banks don't even have bulletproof glass here in AK,  like lower 48

Fri, 08/28/2015 - 18:10 | 6483226 stant
stant's picture

All currency pegs fail

Fri, 08/28/2015 - 18:16 | 6483243 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Not all. The little island nation of Vanuatu has their own currency, the vatu. It used to get clobbered, then a clever Scotsman was put in charge of the CB, he pegged to a basket of currencies *but did not reveal the composition of the basket*. Been stable as a rock since then

Fri, 08/28/2015 - 18:30 | 6483269 Pladizow
Pladizow's picture

Google says it floats?

Fri, 08/28/2015 - 18:27 | 6483263 Peak Finance
Peak Finance's picture

Well, not a lot of meat here, define "fail"

Because my understanding is that currencies are not really allowed to just "fail" anymore right?  

So "Fail" really means that we are going to wake up one morning and find a huge intervention took place the night before in that currency, taking everyone by surprise? 

At some pont I guess we need to stealth bail-out these guys currencies or they dump TP (Treasury Paper LOLZ)  to defend their peg?

Of course the joke being we would not need to stealth bail-out any currency if we just raised the fucking rates already. 

 

Fri, 08/28/2015 - 18:37 | 6483286 s2man
s2man's picture

Forget Kazakhstan, what about China's peg?

Fri, 08/28/2015 - 19:04 | 6483357 atomicwasted
atomicwasted's picture

Algeria FTW

Fri, 08/28/2015 - 19:25 | 6483416 Youri Carma
Youri Carma's picture

Sweden, Danmark?

Fri, 08/28/2015 - 19:57 | 6483493 Yen Cross
Yen Cross's picture

   Sounds about right. These guys borrow in $usd terms. Most of them are just CIA outposts.

 Let's discuss Latin America, Indonesia, and South East Oceania.

 Everyone is so caught -up on Middle Eastern affairs?

Fri, 08/28/2015 - 20:27 | 6483551 FedFunnyMoney
FedFunnyMoney's picture

We have to get China to break that goddamn peg somehow. If they do the Yuan will revalue upward and the monkey will finally be off our back.

Fri, 08/28/2015 - 20:30 | 6483556 wstrub
wstrub's picture

I have a theory that the US will devalue "to save the world". It will be the black swan event that no one is expecting. Jade Helm is the prep long with police militarization as well as constitution and legal changes.

Fri, 08/28/2015 - 20:51 | 6483594 Yen Cross
Yen Cross's picture

 Your theory works great before you factor in the interest payments on $19 trillion.

 The simple fact is that the Fed. can't monetize more debt.

 Contrary to what you're being spoon fed (sic) Inflation through devaluation is only getting worse.

 There's absolutely NO way the Fed can monetize new debt. PERIOD.

 The Fed can covertly, buy back Chinese Treasury holdings. The Tylers will catch it, and all hell will break loose. :-0

 The Fed. is at the end of it's long steamed rope.

 Rational people make irrational decisions when p[laced in stressful situations. Long VIX Bitchez. [I don't need no stinking XIV ETF's]

 

Fri, 08/28/2015 - 21:48 | 6483740 SilverDOG
SilverDOG's picture

Ecuador.

Right in the middle.

Fri, 08/28/2015 - 21:56 | 6483741 MontgomeryScott
MontgomeryScott's picture

I've never heard this one before: "1) Oil rents as a percent of GDP".

 

I have NO IDEA what this means. What are 'Oil Rents'? Does this have something to do with the usury of the USPetrodollar in terms of the usury fee (RENT) charged by the banksters to convert local currencies into FEDSCRIP in order to purchase oil on the 'open market' within OPEC?

ANOTHER new term for me is 'GNI'. I presume this means 'Gross National Income' (in other words, the central government's ability; or lack theref; to raise capital via extortion; i.e. taxes and fees at gunpoint and threat of fines and imprisonment for "failure to comply") within it's own borders.

I guess they shortened the chart on the LH side (hiding the Eurozone and CONUS from view). SAME with the RH side. They narrowed the results down, in fact, to only include the nations within a +4 to -4 rating from 'the median'. It's a popular trick in CHARTPORN (I learned it in a high school English elective class called 'Mass Media And Propaganda', put on by one of the best teachers that I have ever had. Got an A in the course, and was invited to be a reporter for the school paper, by the way).

'the change in the 'real effective exchange' (versus the change in the 'really not-so-real' 'effective exchange)... WHO THE FUCK comes UP with this BULLSHIT terminology, anyway? OH... BLOOMBERG... and HARVARD, and YALE... I guess this bullshit terminology is simply TOO DEEP for me to understand. Bunch of made-up bullshit terms meaning NOTHING in REALITY; but seemingly having 'substance'...

TYLERS:

The next time you're in NYC visiting Mayor Bloomberg, could you smuggle me out a 40-ounce Coca-Cola and some Rubles? I see Russia scored 'low' (or 'high', depending on how you read this upside-down chart). BTW, where does the RENIMBI rate?

Sat, 08/29/2015 - 01:25 | 6484070 Sorry_about_Dresden
Sorry_about_Dresden's picture

As less USD come into China through trade The Chinese Finance Minister will have to establish a mechanism of exchange without using the USD as a medium.

The whole devaluation was just a break with the US Petro Dollar regime.

Gold will, soon, be priced in Yuan. The Chinese have ,essentially, un-pegged their currency from the UST by letting their US Treasury bonds just mature without rolling them over which had been the program to funnel money into the market.

It is amazing no MSM seems the least bit concerned.

The exchange rate could also go to parity, or weaker, meaning we could never afford Chinese products and China would mature their markets into a closed consumeristic economy. Chinese has the biggest GDP on the planet surpassing the USA just recently.

China is doing the exact same thing the FRBNY and Treasury did in 2008. Give trillions to the banks by piling into the market. Same thing the FRBNY did.

The new Chinese consumer lives in a society that saves money and has no consumer debt. The US consumer is buried in debt. The debt owed the Chinese and Japanese. Who would you expect to come out better?????

China is ramping up their own MIC and that will employ a lot of skilled, highly paid, workforce who will support their own local economy.

I have been to China 4 times since 2007 and I think the Chinese could roll right over us if they willed to do so. Luckily the Chinese are not imperialist by nature.

Sat, 08/29/2015 - 07:39 | 6484287 webmatex
webmatex's picture

I think the four currency pegs may be backing the fat lady soon - hey they just started playing.

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