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Guest The_Oldie

Redeker, Global Head Of Currency Bnp Paribas.

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Guest The_Oldie

Very interesting seven minute video.

http://www.bloomberg.com/avp/avp.htm?clipS...rHsIobAENNQ.asf

Decline in global property prices, US will not be alone, UK next than perhaps Australia.

Redeker of BNP Sees Pound Dropping to 75 Pence per Euro: Video

Sept. 26 (Bloomberg) -- Hans Guenter Redeker, global head of currency strategy at BNP Paribas SA, talks with Bloomberg's Jeremy Naylor from London about financial regulation, economic growth in the U.S. and the U.K., and the outlook for the pound and the dollar. The pound traded near a 1 1/2-year low versus the euro before the Bank of England's first 10 billion-pound ($20.1 billion) auction of emergency three-month funds, designed to ease the credit drought in the money markets. (Source: Bloomberg)

00:00 Sees pound "weakness" on slower U.K. growth

01:35 U.K. regulatory system "needs to be reformed"

02:26 Sees house price declines beyond U.S., U.K.

03:34 Expects euro to reach 0.75 against the pound

04:27 Outlook for U.S. dollar, currency hedges

05:55 Recession scenario "definitely on the cards"

Running time 07:46

Last Updated: September 26, 2007 07:32 EDT

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Guest The_Oldie

http://www.bloomberg.com/apps/news?pid=new...id=ac_dqZn2quC4

Pound Falls on Credit Squeeze; Pares Decline After BOE Auction

By Lukanyo Mnyanda

Sept. 26 (Bloomberg) -- The pound fell against the dollar on speculation the squeeze on short-term bank lending will hurt the economy and reduce demand for higher-yielding assets.

The pound also traded near the lowest since January 2005 versus the euro before a report tomorrow that may show house- price growth slowed this month, according to economists surveyed by Bloomberg. The U.K. currency pared losses after the Bank of England said its three-month auction of emergency cash for the money markets today didn't receive a single bid from banks.

``We're pretty bearish on sterling,'' said Russell Jones, London-based head of global fixed-income and currency research at RBC Capital Markets, the investment-banking arm of Canada's biggest lender by assets. ``The trigger is going to be the fact that the Bank of England is the central bank most likely to follow the Fed's example'' and pare borrowing costs.

The pound fell to $2.0159 by 4:50 p.m. in London, after earlier declining as far as $2.0106 and from $2.0186 yesterday. It was little changed at 70.07 per euro, after earlier sliding to 70.28 pence.

The absence of any bids for the 10 billion pounds ($20 billion) offered by the Bank of England stoked speculation strains in the money market aren't as bad as some imagined, buoying the pound. The central bank acknowledged that at a minimum 1 percentage point above the central bank's main lending rate of 5.75 percent, the funds available at today's auction were ``expensive.''

`Reputation' Risk

Banks may also have turned down the emergency funding for fear their identities would be revealed.

``There was no incentive for the banks'' to bid for money today ``from a reputation perspective,'' said Harvinder Sian, a fixed-income strategist at ABN Amro Holding NV in London. ``They had an incentive not to go, simply because if that information was released or ever got out, it could have created rumors.''

Nationwide Building Society, the U.K.'s fourth-largest mortgage lender, will tomorrow probably say the cost of a home rose 0.3 percent this month, from 0.6 percent in August.

``The economy is going to weaken because of the decline in global property prices,'' said Hans Guenter Redeker, head of currency strategy at BNP Paribas SA in London. ``Sterling has further downward potential.'' Investors should ``prepare'' for a decline to 75 pence to the euro, he said.

The pound stayed lower after a government report today showed economic growth held at 0.8 percent in the second quarter.

Gilts fell, with the yield on the benchmark 10-year bond rising 3 basis points to 5.05 percent. The price of the 4 percent note due September 2016 fell 0.23, or 2.3 pounds, per 1,000-pound face amount, to 92.50.

Demand rose at an auction of inflation-linked bonds today. The U.K.'s Debt Management Office sold 900 million pounds of the 30-year securities, with a bid-to-cover ratio of 2.03 times, compared with 1.71 times at the last auction on June 26.

The implied rate on the December interest-rate futures contract fell 2 basis points to 6.16 percent, suggesting the Bank of England may follow the Federal Reserve's Sept. 18 rate cut to spur the economy.

The contract settles to the three-month London interbank offered rate for the pound, which has averaged about 16 basis points more than the benchmark rate over the past decade.

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Guest The_Oldie

http://www.bloomberg.com/apps/news?pid=new...id=a_Ax_hT_xSUA

Subprime Turmoil Will Boost Euro, BNP Says: Chart of the Day

By Thomas R. Keene

Sept. 12 (Bloomberg) -- The euro will strengthen into 2008 as the fallout from the collapse of the U.S. subprime-mortgage market ``will take two years to deal with,'' BNP Paribas foreign- exchange strategists say.

Hans-Guenter Redeker, global head of forex strategy at BNP Paribas in London, cites U.S. Treasury Secretary Henry Paulson's comments reported by the Financial Times that the turmoil is likely to last longer than the 1998 crisis in Asia and Russia.

Central bank efforts to inject more liquidity into the financial system will have only a limited effect, Redeker says.

``Liquidity adds just ease the symptoms of the crisis,'' he writes.

Meanwhile, the euro will strengthen.

The chart of the day shows the euro's ascent against the dollar in a one-year period to June 30 and Redeker's forecast to June of next year. Note the difference in slope of the two lines. BNP Paribas forecasts 1.42 dollars per euro; while a simple extrapolation of 12-months trailing euro strength would suggest the 1.46 to 1.47 level (a simple extension of the red line).

The European Central Bank today loaned banks an additional 75 billion euros ($104 billion) for three months to reduce the cost of longer-term credit in money markets.

``The next few days will provide important information on whether this generous European Central Bank operation can smooth the money market,'' writes Redeker.

BNP Paribas also forecasts a stronger yen, to 107 per dollar, yet sees the pound sterling weakening to 1.89 by mid- 2008.

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Very interesting thanks for that Oldie, that confirms my view that the pound will drop significantly in the near future.

I have the impression too may people on this website concentrate on the Dollar to measure the sterling strength, which is flawed as the dollar is weaking itself, the Euro is the right measure to observe sterling strength or rather weakness.

0.75 means £1=1.33 Euros that would be drop of more than 10% since the recent highs just above 1.50.... that certainly puts UK savings interest rates (even above 6%) into perspective!

Edited by not_DrBubb

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BNP Paribas also forecasts a stronger yen, to 107 per dollar, yet sees the pound sterling weakening to 1.89 by mid- 2008.

This should even brighten up RealistBear a bit, although if he had put his savings in Euros he would certainly be better off! ;)

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Very interesting thanks for that Oldie, that confirms my view that the pound will drop significantly in the near future.

I have the impression too may people on this website concentrate on the Dollar to measure the sterling strength, which is flawed as the dollar is weaking itself, the Euro is the right measure to observe sterling strength or rather weakness.

The best way to measure the value of currencies is against real things, not against other paper currencies.

I don't believe the inflation numbers, so storing wealth is far safer in real things. We might not see much inflation in the CPI, but were' going to see it in goods.

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Guest The_Oldie
The best way to measure the value of currencies is against real things, not against other paper currencies.

I don't believe the inflation numbers, so storing wealth is far safer in real things. We might not see much inflation in the CPI, but were' going to see it in goods.

But not property according to Redeker ;).

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The best way to measure the value of currencies is against real things, not against other paper currencies.

I don't believe the inflation numbers, so storing wealth is far safer in real things. We might not see much inflation in the CPI, but were' going to see it in goods.

Completely agree. I've said it before: If I was a hedge fund, I would short Sterling to the max and would pile into gold and silver.

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