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Old Mutual to Move Zimbabwe Listing as Currency War Escalates5/8/2020
Old Mutual to Move Zimbabwe Listing as Currency War Escalates


Old Mutual Ltd. is poised to stop trading its shares on the Zimbabwe Stock Exchange, the latest step in the governments efforts to bring order to its chaotic foreign-exchange market.To get more news about OlympusFx, you can visit wikifx news official website.
  The insurer agreed to move its listing to a new bourse in the country that will only deal in foreign currency, three people with direct knowledge of the matter said. The deal came after talks on Monday between representatives of Old Mutual, the Treasury, the Securities and Exchange Commission of Zimbabwe and the ZSE, the people said, asking not to be identified because negotiations were private.
  The government of President Emmerson Mnangagwa has blamed a plunge in the local currency on the 175-year-old insurer‘s share price. Companies were using the so-called Old Mutual Implied Rate to determine the forward value for the Zimbabwean currency by using differences in the dollar values of the company's securities in London, Johannesburg and Harare.
  By eradicating the implied rate, the nation‘s ruling party is seeking to end a multitude of exchange rates used by Zimbabweans to navigate the country's myriad economic challenges. The government last week set new regulations to compel businesses to use a single exchange rate for pricing goods and services in a bid to tame inflation of 737% in a country battling with shortages of everything from food to fuel.
  Tabby Tsengiwe, the Johannesburg-based insurer‘s spokeswoman, didn't respond to a call or a text message seeking comment. Finance Minister Mthuli Ncube didnt respond to calls for comment.
  Another meeting is scheduled for next week to resolve administrative issues and discuss the finer details, the people said.

  A surge in Old Mutuals Zimbabwe stock -- which like other shares was being used as a hedge against inflation -- widened the gap between its South African and U.K. securities, causing the OMIR to rise to 122. The Zimbabwe dollar has weakened to 72.1470 per U.S. dollar on a foreign-currency auction system that was introduced after a currency peg of 25 was dropped last month.
  Terminating Old Mutual‘s listing paves the way for dealing to resume on the Harare-based ZSE -- which was abruptly halted on June 28 -- once Zimbabwe's Financial Intelligence Unit has completed a probe into trading on the bourse. It is still unclear when the stock exchange in the resort town of Victoria Falls will begin operating.
  Old Mutual, which listed on the Zimbabwe Stock Exchange in December 1999, opened its first office in the country in 1902 and offers life, property and casualty cover, asset management, property development and banking services in the country.

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Indonesias Direct Financing Is Test Case for Emerging Markets5/8/2020
Indonesias Direct Financing Is Test Case for Emerging Markets


Bank Indonesias unprecedented move to buy about $27 billion in bonds directly from the government may prove to be an exception rather than the norm in emerging markets.To get more news about OlympusFx, you can visit wikifx news official website.
  With the world economy in crisis and Modern Monetary Theory gaining attention, governments are being pressured to spend more and turn to their central banks to print money to foot the bill. But when it comes to scooping up that debt, most central banks are doing it in the secondary market.
  Sources: Institute of International Finance, using data from Bank for International Settlements, International Monetary Fund, national governments


Three weeks on, currency and bond markets appear to have given Indonesia a pass on its direct financing foray. Analysts say thats because the central bank gave a clear signal that it was a one-time program and officials spearheading the plan, like Finance Minister Sri Mulyani Indrawati, are credible.
  "The Indonesia burden-sharing program is a success given it has a clear timeline and framework," said Jean-Charles Sambor, London-based head of emerging markets fixed income at BNP Paribas Asset Management. "If, however, we start to see a material increase in the size of such programs in emerging markets, it could result in considerable weakness in the currency."  In many emerging nations, laws forbid the central bank from purchasing debt straight from the government, with several now buying domestic paper in the secondary market instead. Fitch Ratings Ltd. cites the following countries as having taken the latter approach: Indonesia, the Philippines, Thailand, Poland, South Africa, Croatia, Romania, Hungary, Chile, Costa Rica and Colombia.
In Argentina, which defaulted on its debt earlier this year, the central bank has transferred 1.3 trillion pesos ($18 billion) to the Treasury since the lockdown was announced on March 19. Cash in circulation has surged, dollar demand is high, and with a massive economic contraction underway, consumer prices are set to rise a staggering 53% over the next 12 months.
  The Bank of Russia came under pressure to help fund a growing budget deficit after the energy exporter was hit by a double blow from the pandemic and slump in global oil demand. However, real interest rates remain positive there, so theres still room to use conventional measures.
  The South African Reserve Bank is resisting calls for deficit financing, arguing it would bankrupt the central bank. And while the Reserve Bank of India hasn‘t bought bonds directly from the government, it's expanded its balance sheet amid the pandemic by allowing Indian banks to borrow at cheap rates and lend money back to the federal government.
  "There has been a lot of talk of monetary financing, but much less action," said Elina Ribakova, deputy chief economist at the Washington-based Institute of International Finance.

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