After the announcement for introducing the customs on the imports of the Chinese goods from the USA in amount of После најавата за воведување царини на увозот на кинески добра од страна на САД во вредност од 300 billion dollars, of whom some parts came into power, and some are delayed for December, China also announced introducing of customs for 75 billion dollars worth imports of USA goods. The conflict that began with seemingly rational purposes has threatened to grown in the open currency war. Expression,, currency war,, describes measures taken from two or more states, that aim to adjust the value of the own currency according to its own economic policy, most often depreciating the same one in aim to incite the export. Last global series of cascading devaluation dates from the 30s years of the previous century in parallel with the great depression.
Although the last years interventions of the Peoples Bank of China (PBC) actually were directed toward strengthening of the renminbi, this time PBC was abstained from purchasing of amounts of domestic currencies, allowing renminbi to fall below the psychological boundaries of 7:1 in relation to the dollar, as answer of the market pressure and expectations for the downgraded export. Trump as answer of the new created competitive advantage of the Chinese exporters, made a pressure for more creative cutting of the interest rates under presumption that such step will cause downward pressure over dollar. There is a huge possibility that FED, independently from Trump pressure, will take the same measure as answer of the slow downing of the American economy growth that in great measure is result of the trade war. But it will be gradual process and there are little possibilities that it will correct the trade in balances between both sides. In the meantime besides the last cutting of the FED rate, the dollar has strengthened as result of speeder growth of the USA economy in comparison to the other developed countries.
There are small possibilities that USA will take collaboration from the mutual partners for mutual intervention over the global foreign exchange market, very similar as in the years 1985, 2000 and 201, but this time in action to move the value of the renminbi upward and the value of the dollar downward, in circumstances when the relations between USA and its traditional alliances are disturbed as result of ignoring the WTO rules by the Washington.
At the same time, USA didn’t deviate from the threatening for imposing the taxes of the goods produced in EU and Japan that will cause returning with the same measure. USA, alone could try to make impact over the value of the dollar through selling dollars and through buying instruments in the foreign currencies.
Decisions made by the Central Banks from the globe largest countries (that have large effect over the all global economy) and that are in relation of setting the height on the basic interest rates creates significant impact primarily on the prices of the governmental securities and consequently over the prices on the most traded world currencies.
Managing the basic interest rates represents one of the most significant instruments of the monetary policies established by the global Central Banks. Central Banks through the process of sublimating the analyzed data for financial and macroeconomic flows, above all at the local markets and putting them in correlation with the strategic aims make decisions that determine the height of the basic interest rate on the regular basis and by the strictly predefined calendar. In the focus of the world developed economies and particularly in the frame of the developing economies, besides the domestic central banks, always with great attention are followed the decisions made by the American FED and European Central Bank ECB.
Last declining of the federal funds interest rate from the previous month for 25 basis points (first, after 2008) at some point was expected, having on mind previously announcements from the FED by itself but also from the pressure that president Trump perpetually perform over Federal Reserves.
Namely, the White House for a long time is leading a campaign for weakening of the American dollar in the light of the current global economic movements and trade war between USA and China. The president Trump in his last statements has commented that lowering of the interest rate of the federal funds is insufficiency and that FED should consider into the direction of providing the assistance to the American businesses. ,, In this moment FED has holding us with hands tied” – has commented the president Trump and stressed out that FED should take under consideration to decrease the interest rate for whole percentage point.
Recently I was attending an event where it was discussed for the new investment opportunities and challenges. We were all agreed that now it is the “Millennials” era and that we should set our focus on hi – tech companies. But, that what we didn’t mentioned, and I would like to share with you, because there are equal important are so called “green companies”. Why exactly them?
The first factor that globally concerns people is the global warming and climate changes caused by the emission of the carbon dioxide and so called greenhouse gases (sometimes abbreviated GHG) in the atmosphere. As result of the increased presence of these gasses, the global atmosphere temperature rise and has numerous negative effects and irreparable damages in the environment. According to the World Meteorological Organization of the United Nations (UN) projections for the rise of the global temperature are from 3 to 5 Celsius degrees and it overcomes the global target for limitation of the temperature rise of no more than 2 Celsius degrees.
The consequences of the global warming are: increasing temperature, ice melting at the polar sides on the Earth, weather disasters, floods, increased events of droughts and fires. All above enumerated events has huge impact over people health and cause extinction of many animal species. The public become more aware for this problem. Global warming is more and more important topic among world governments and many companies are striving to become more ecologically conscious or “green” companies.