With insane levels of turmoil hitting news wires and volatility striking left and right, it seems so easy to forget just how deep the cause for the currency markets have really been these days. Along with other borrowing tactics, intervening on your nation’s currency is becoming a disturbingly normal activity. The Wall Street Journal posted the following data map on Saturday reminding us of just how deep these 9 nations went last year to protect their economic interests. While not all of these are direct currency purchases or sales, for those that are, propose nothing but issues down the line.
From the standpoint of FX reserves as a % of GDP, no one seems to be facing more severe a situation in terms of currency reserves than the SNB, who at the time of their last major intervention (following the proclaimed floor of 1.2000) stood at just over 70%. This number has slowly and slightly stabilized in subsequent months but still remains very uncomfortably high (reserves held / reported for November were 231.6bb Francs). While the market seemed to get the drift of such a proclamation, the Yen has been less lucky with ambiguity over what could be deemed a reasonable level and continues to strengthen despite government efforts. EUR/JPY is now under 100 and USD/JPY continues to float in its lowest range.