Sterling At Risk Of "Large-Scale Devaluation" As Currency Wars Intensify

   on February 19 2013 10:24 AM
Treasury Secretary Geithner puts a piece of foreign currency back in his wallet during a break in his testimony on Capitol Hill in Washington
Treasury Secretary Timothy Geithner puts a piece of foreign currency back in his wallet after showing off the contents of his wallet to a photographer during a break in his testimony before the House Appropriations Subcommittee on General Government and Financial Services on Capitol Hill in Washington, May 21, 2009. REUTERS

Today’s AM fix was USD 1,613.50, EUR 1,208.80 and GBP 1,041.57 per ounce.Yesterday’s AM fix was USD 1,611.25, EUR 1,206.39 and GBP 1,041.53 per ounce.

Silver is trading at $30.13/oz, €22.68/oz and £19.56/oz. Platinum is trading at $1,700.25/oz, palladium at $765.00/oz and rhodium at $1,245/oz.

Gold slipped 0.1 percent to $1,607.06/oz on Monday after falling as low as $1,598.04/oz on Friday, its weakest since August.

Cross Currency Table – (Bloomberg)

Gold inched up Tuesday morning, however the dollar’s rise to a one month high limited bullion’s gains.

European markets are cautious ahead of Italy’s elections on Feb. 24-25th, including candidate and former Prime Minister, Silvio Berlusconi. Mario Draghi urged finance chiefs from the G20 to be “prudent” when talking about currency movements.

The Bank of Japan’s minutes to their policy meeting noted that the government’s asset purchasing plan could continue for 5 years.

The U.S. Federal Reserve’s policy minutes are available tomorrow, and will be closely scrutinized.

India's duties on gold imports may increase in an effort to decrease the country’s account deficit said an employee from the largest state run gold importer.

More violence in South Africa as 4 security guards were disfigured with machetes and at least 13 people were injured, in a labour fight at Anglo American Platinum.

Iran said it will not close the Fordow nuclear plant yesterday. Ramin Mehmanparast, spokesman for Iran's foreign ministry, commented that the reported offer was unacceptable. However, they are ready for logical negotiations, he noted.

Currency Ranked Returns in Great British Pounds – (Bloomberg)

The pound took a fresh beating yesterday as concerns of currency wars and debasement of sterling led to another sell-off and experts said the currency was at risk of a "large-scale devaluation".

Sterling trails only Japan's yen as the worst performer against a basket of international currencies this year as a 4.5 per cent decline fuels import prices and pushes up the cost of food, insurance and other necessities for hundreds of thousands of households. 

As central banks tolerate higher levels of inflation, the pound is set to weaken further across the board particularly against safe haven gold.

UBS warned that the pound seems clearly at risk of following the yen and "suffering the next large-scale devaluation."

Dealers also noted weekend comments from Bank of England rate-setter Martin Weale, who warned the pound was still too high to help the UK economy rebalance effectively. The continued pressure on the currency comes after its biggest weekly loss since June last year amid gloom over weak growth prospects. 

The Bank of England has signalled it is willing to tolerate higher inflation for longer, while the pound's safe-haven appeal has also waned as the European Central Bank makes explicit commitments to prop up Eurozone strugglers and preserve the single currency.

XAU/GBP Daily, FEB2108-19FEB13– (Bloomberg)

The yen also fell as the G20's finance ministers in Moscow shied away from criticism of Japan for weakening its currency. Prime Minister Shinzo Abe has repeatedly called for a cheaper currency in order to help the country's exporters compete.

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Click here to register.NEWS  Gold inches up but stronger dollar caps gains - Reuters

Gold Advances as Price Drop Seen Boosting Demand; Silver Gains - Bloomberg

Audit confirms U.S. gold safe at New York Fed – Los Angeles Times

Iran scolds world powers over gold sanctions "offer" – Ahram Online

France accused of cover-up over Tunisian dictator’s gold – The Times

COMMENTARYSterling is battered once again amid warnings of a large-scale devaluation – The Independent

They've Been Saying Gold Bull Market Is Over For 12 years – King World News

Get Ready for Some Major Disinformation about America’s Gold – Economic Policy Journal

Jim Rickards: Currency War 3 Has Just Begun – Financial Sense

Global currency wars: Owning gold is like abandoning the battlefield – Zero Hedge

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