The high futures contracts threaten Asian central banks

Asian central banks are increasingly being used financial derivatives to protect their currencies from the strength of the dollar, raising questions about the period they can do, and whether they postpone problems for the future. The amount of the dollars that the Indian Reserve Bank has decided to sell in a predetermined price through futures in a predetermined price is the highest level ever at $ 68 billion in December. Indonesian Bank sales for the dollar in futures, $ 19.6 billion, the highest level since 2015, according to the latest official data. Increased futures indicate a change in the central bank strategy that intervenes to protect their currencies. Fear of dollar transactions, but the use of derivatives in addition to immediate transactions to counteract the dollar increase raises concerns about the risks that defer the pressure of selling rather than getting rid of it. Also read: What are the safe havens for Asian investors from Trump’s fluctuations? “In essence, the value of the currency is postponed to a later date, and at the same time the main reserves are preserved as a way to show trust.” I’m a little concern about this scenario. “Indonesia and the Indian Reserve Bank immediately did not comment on Bloomberg’s request. Earlier the use of financial derivatives. Trump’s threats to impose customs duties of currencies against the dollar, in addition to his willingness to manipulate countries other than manipulation of the currency, which is more political investigations on the country’s intervention. Currency manipulation. Banks, including the possibility of reducing costs, and it does not drain the cash supply. The strategy enables central banks to make traders in a guess -condition. While the Philippines has reduced its sales to only $ 874 million, according to the information of the International Monetary Fund. On February 11, the Indian Reserve Bank was believed to have significantly intervened to increase the value of the rupee, as the Indian currency rose by about 1% and achieved its biggest profit since November 2022, which activated the “stop loss” situation among investors who expected the rupees to fall. Traders said the central bank is entering into the immediate trading markets and futures. An opportunity for central banks in theory, which recently offered a decrease in the dollar, an opportunity for central banks, as Trump has canceled or postponed Customs on Canada, Colombia and Mexico, which has risen doubts about whether it will implement its biggest threats. A comprehensive dollar index has lost about 1.7% so far this year. Also read: Emerging markets are sighing of relief after postponing Trump duties. There is also evidence that indicates that policymakers are changing their way, as it appears that the new Governor of Indian Reserve Bank, Sanjay Malhutra, is using a more flexible approach to management of the exchange rate. The Indian Reserve Bank has reduced its stake in the non -delivered futures market (outside India), and instead performs internal operations in an effort to improve local liquidity, according to strategic experts. But the benefits of futures mean that the strategy is likely to remain under central banks. “I see a very small number of negative” to use the futures market, “said Aaron Hurd, investment manager of the Country Group at State Street Global Advisors. He concluded that the central banks should be careful about using futures not to build large quantities of them, but that the situation is not a major concern at the moment.