kilroy Posted March 2, 2010 Share Posted March 2, 2010 http://www.businessweek.com/news/2010-03-02/bank-of-england-plans-to-sell-3-year-bonds-in-dollars-update1-.html March 2 (Bloomberg) -- The Bank of England said it plans to sell three-year bonds in dollars to finance its foreign-exchange reserves. Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted March 2, 2010 Share Posted March 2, 2010 http://www.businessweek.com/news/2010-03-02/bank-of-england-plans-to-sell-3-year-bonds-in-dollars-update1-.html March 2 (Bloomberg) -- The Bank of England said it plans to sell three-year bonds in dollars to finance its foreign-exchange reserves. Quietly IMFing? Quote Link to comment Share on other sites More sharing options...
TheUsualSuspect Posted March 2, 2010 Share Posted March 2, 2010 "The Bank of England is seeking to raise funds as confidence in the U.K. currency plummets on concern no party will win an outright majority in a forthcoming general election." The BoE leading the way in restoring faith in Sterling then I wonder when the buy-one-get-one-free on UK bonds will start ? Quote Link to comment Share on other sites More sharing options...
kilroy Posted March 2, 2010 Author Share Posted March 2, 2010 Quietly IMFing? In retrospect, it's possibly becuase they stepped in yesterday and used some reserves when sterling fell off the cliff (rumoured intervention yday) Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted March 2, 2010 Share Posted March 2, 2010 Is it because: 1. It would be difficult to get away a bond sale in Sterling. or 2. The Bank of England thinks that Sterling will appreciate against the dollar? Given that they don't like to take unnecessary risks, sadly I guess it is the first option. Unless they can take out cost effective 'insurance' against adverse currency moves. Or will be playing swapsies with the Fed after the sale? Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted March 2, 2010 Share Posted March 2, 2010 Carter Gilts. Quote Link to comment Share on other sites More sharing options...
sharpe Posted March 2, 2010 Share Posted March 2, 2010 Carter Gilts. Haven't the BoE issued euros also. I think the total of foreign currency issued is relatively small? Quote Link to comment Share on other sites More sharing options...
Optobear Posted March 2, 2010 Share Posted March 2, 2010 Carter Gilts. I guess the idea is that it transfers the foreign exchange risk from the investor onto the UK government. Will they pay the interest payments in $ too or just the repayment of the capital at maturity? Does rather smack of desperation. Quote Link to comment Share on other sites More sharing options...
babesagainstmachines Posted March 2, 2010 Share Posted March 2, 2010 You people have no idea what you are talking about. Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted March 2, 2010 Share Posted March 2, 2010 You people have no idea what you are talking about. Explain it and I'll give you a lovely bonus. Quote Link to comment Share on other sites More sharing options...
ZeroSumGame Posted March 2, 2010 Share Posted March 2, 2010 (edited) Is it because: 1. It would be difficult to get away a bond sale in Sterling. or 2. The Bank of England thinks that Sterling will appreciate against the dollar? Given that they don't like to take unnecessary risks, sadly I guess it is the first option. Unless they can take out cost effective 'insurance' against adverse currency moves. Clearly Roger Bootle thinks this is a possibility. IIRC this is a consequence of having such a low base rate for so long - as he clearly expects. And US interest rates are signalled upwards. Yes, I know some of you are going to say this is counter-intuitive. See my sig. You people have no idea what you are talking about. Go on then enlighten the masses............................ Edited March 2, 2010 by RockingHorse Quote Link to comment Share on other sites More sharing options...
Guest tbatst2000 Posted March 2, 2010 Share Posted March 2, 2010 The bank wants some dollars to hold in reserve for later and decided that there was a better market for USD bonds than GBP ones. Maybe it also decided that, rather going and buying dollars directly and further pushing the pound down, it made more sense to cut the FX markets out of the deal. I must admit though, I had no idea they'd ever issued bonds in any currency other than sterling and it's not a good omen at all that they'd do this right now. Quote Link to comment Share on other sites More sharing options...
wren Posted March 2, 2010 Share Posted March 2, 2010 Just imagine if bonds were issued denominated in ounces of gold. They could be called gilts. Quote Link to comment Share on other sites More sharing options...
kilroy Posted March 2, 2010 Author Share Posted March 2, 2010 (edited) You people have no idea what you are talking about. Oh, so the rumours on the trading floor (I sit across the aisle from flow sales, and opposite the fx prop guys) of BoE intervention which arrested the spike down of the pound (a cent against both the dollar and euro in less than a minute) are wrong? BoE has limited fx reserves compared to 1992, they need to choose their battles very carefully and to reload at every opportunity. Edited March 2, 2010 by kilroy Quote Link to comment Share on other sites More sharing options...
TheUsualSuspect Posted March 2, 2010 Share Posted March 2, 2010 You people have no idea what you are talking about. Nobody does at the moment. Anyone who claims to be an expert through such uncertain times is either deluded or a snake-oil salesman. Or perhaps a "Master of the Universe" Banker ? 1/Physics is impossibly difficult to understand at it's furthest reaches. 2/Medicine is important. 3/Engineering is much respected. 4/Banking is guesswork (as is Economics). I'm quite happy to not understand 1-3, but point 4 should be a bloke in a Bowler hat who looks after my money. Not a combination of 1-3. Quote Link to comment Share on other sites More sharing options...
chumpafoo Posted March 2, 2010 Share Posted March 2, 2010 The central bank has issued three-year notes in March every year since 2007 to finance foreign-exchange reserves that support its monetary policy objectives, according to the statement. This isn't a new decision... Quote Link to comment Share on other sites More sharing options...
kilroy Posted March 2, 2010 Author Share Posted March 2, 2010 This isn't a new decision... and what was sterling doing last march? Quote Link to comment Share on other sites More sharing options...
ZeroSumGame Posted March 2, 2010 Share Posted March 2, 2010 Oh, so the rumours on the trading floor (I sit across the aisle from flow sales, and opposite the fx prop guys) of BoE intervention which arrested the spike down of the pound (a cent against both the dollar and euro in less than a minute) are wrong? BoE has limited fx reserves compared to 1992, they need to choose their battles very carefully and to reload at every opportunity. I don't doubt for a second that there was a swift and silent intervention by the BoE. Just so as we don't all feel too isolated, there is a specufest against the EUR too. Hedge Funds Try 'Career Trade' Against Euro http://online.wsj.com/article/SB10001424052748703795004575087741848074392.html Seems like 1992 was only yesterday................................... Quote Link to comment Share on other sites More sharing options...
A.steve Posted March 2, 2010 Share Posted March 2, 2010 Is it because: 1. It would be difficult to get away a bond sale in Sterling. or 2. The Bank of England thinks that Sterling will appreciate against the dollar? Given that they don't like to take unnecessary risks, sadly I guess it is the first option. Unless they can take out cost effective 'insurance' against adverse currency moves. Well - the first thing I thought of was about the BOJ's moves... The BOJ bought US-dollar debt to depress the value of its currency - thus supporting the Yen-* carry. Isn't issuing your debt in a foreign currency likely to support the value of a currency - thus suppressing any carry trade from Sterling? Doesn't it (in some small way) encourage inward investment? Might that explain the rise on the FTSE100 today? Quote Link to comment Share on other sites More sharing options...
scepticus Posted March 2, 2010 Share Posted March 2, 2010 Is it because: 1. It would be difficult to get away a bond sale in Sterling. or 2. The Bank of England thinks that Sterling will appreciate against the dollar? Given that they don't like to take unnecessary risks, sadly I guess it is the first option. Unless they can take out cost effective 'insurance' against adverse currency moves. or 3, because the FED will at some point over the next few years enact policies which a nation the size of the UK can't get away with, and that by holding $ denominated debt, whatever benefits accrue to the US treasury as a result of these FED actions will also accrue to other major nations issuing debt denominated in dollars? In short, it could represent the beginnings of a mini Bretton Woods III. Watch to see if other nations do it, particularly japan and sweden. Quote Link to comment Share on other sites More sharing options...
chumpafoo Posted March 2, 2010 Share Posted March 2, 2010 and what was sterling doing last march? Started March 2007, yes last year march was bad but not all the years they did it....(Don't get me wrong I think the £ is fooked, I just think this story is a non-event) March 2007 - 1 USD = 0.513531 GBP March 2008 - 1 USD = 0.499664 GBP (Best month that year) March 2009 - 1 USD = 0.705064 GBP (Worst month that year) Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.