Hints of FX intervention as central banks debate Brexit response

Section:

By Patrick Graham and Anirban Nag
Reuters
Thursday, June 16, 2016

LONDON -- Warnings from officials in Japan and Switzerland on Thursday left financial markets wondering about what central banks are planning behind the scenes if Britain votes to leave the European Union next week.

It is five years since major monetary authorities waded in to currency markets in a concerted push to quell gains for the yen after a shattering earthquake in Japan.

... Dispatch continues below ...



ADVERTISEMENT

A Contrarian's Call Option on Gold

Sandspring Resources' Toroparu project in Guyana is the fourth-largest gold deposit in South America held by a junior mining company.

Experienced backers of Sandspring Resources include Silver Wheaton, the John Adams / Energy Fuels group in Denver, and Frank Giustra's Fiore Group in Vancouver.

A 2013 preliminary feasibility study shows strong economics for this large-scale mine at US$1,400 gold. With a current gold price below US$1,300, Sandspring is for investors who believe that gold price suppression will be overcome.

For a detailed report on Sandspring Resources by Tommy Humphreys of CEO.CA, please visit:

https://ceo.ca/@tommy/a-ten-million-ounce-call-option-on-gold



Such coordinated action in the era of floating exchange rates is rare, and central banks have so far restricted themselves to promises to provide any funding banks might need in the event of a stormy aftermath to next Thursday's referendum.

Officials told Reuters earlier this week the European Central Bank would pledge to backstop markets in tandem with the Bank of England after a vote to leave.

But a raft of official policy statements following four major central bank meetings this week -- and amid evidence that momentum within the British electorate is shifting towards the Brexit camp -- offered hints that policymakers are considering whether they will need to do more.

"Sharp fluctuations could occur in the FX market, with the pound depreciating massively amid low liquidity. This could prompt the central banks of the developed countries to conduct joint FX market interventions," said Antje Praefcke, a currency strategist at Commerzbank in Frankfurt.

The Swiss National Bank said outright it would be active on the franc and would take steps to counter any Brexit fallout. Chairman Thomas Jordan added central banks were holding intense exchanges on market developments. ...

... For the remainder of the report:

http://uk.reuters.com/article/us-britain-eu-intervention-idUKKCN0Z225Y

* * *

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 26-29, 2016
Hilton New Orleans Riverside
New Orleans, Louisiana
http://neworleansconference.com/

Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference:

https://jeffersoncompanies.com/landing/2014-av-powell

Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16