EFTA02530184.pdf

From: Jeffrey Epstein <[email protected]> Sent: Thursday, May 6, 2010 2:36 PM To: Landon Thomas Subject: Re: Central Banks' Losses from EURUSD this Year. USD300 Billion and Counting there is only one currency„ us dollars.. there is only one bank jpmorga=. . same story as last year. . the other intersting fact is gold , whic= does not appear to be the haven any longer. with all the hoopla, gold =as topped out and has not really run On Thu, May 6, 2010 at 10:16 AM, Landon Thom=s dand=nthomasjr63@gmailcom <mailto:[email protected]» wrote: time to double down? Forwarded message From:=Stephen L Jen Date: Thu, May 6, 2010 at 2:59 PM Subject: Central Banks' Losses from EURUSD this Year: USD300 Billion an= Counting To: Stephen L Jen Central Banks' Losses from EURUSD this Year: USD300 Billion and Co=nting May 6, 2010 Bottom line: Central =anks have sustained USD300 billion in valuation losses (YT0) from the depr=ciating euro. The level of angst at these central banks may be elevated=now and the risks are rising that some of these central banks de-rate the =uro. Total foreign currency reserves held by all central bank have reached =SD9.0 trillion, with the top-8 reserve holders managing some US$5.3 trilli=n. Of this latter amount, US$1.55 trillion (or 30% of the total) is hel= in euros. Corresponding to the 10% depreciation in EURUSD year-to-date= the top-8 reserve holders may have suffered close to USD200 billion in va=uation losses, and for all central banks the total valuation loss has been=around USD300 billion. We guesstimate that China (SAFE) may have suffer=d a US$80 billion in EUR valuation losses, US$14 billion for Russia, and U=$7 billion for Korea. These figures do not include actual and potential=further losses on their underlying holdings of European bonds. <=i> If EURUSD trades down to 1.2150, all of the monetary gains from=the dollar-to-euro diversification in the past decade will be lost. EFTA_R1_01672733 EFTA02530184  (1) Central banks' reserve managers are presumably reconsidering the=r dollar-diversification strategy, now that the euro is also found to be l=ss than a perfect 'anti-dollar'. (2) The risks of further declines in the euro and a possible debt resc=eduling in Europe are likely to be sources of additional worries for centr=l banks with large exposures to the euro. (3) In addition to central banks being concerned about the euro, the e=ro-selling process has only just begun for the large real money institutio=al funds, and the potential for much larger funds to reduce their euro exp=sures is significant. Since January, my mental target for EURUSD has been 1.20. However, = now think the risk to EURUSD is heavily biased to the downside relative t= this figure. slj=/p> Stephen L Je= Managing Director of Macroeconomics and Currencies =br> <=trong> BlueGold Capital Management LLP 4 Sloane Terrace, SW1X 9DQ London, UK Authorised and regulated by the Financial Services Authority Confiden=iality Notice Copyright material and/o= confidential and/or privileged information may be contained in this e-mai= and any attached documents. The material and information is intended for =he use of the intended addressee only. If you are not the intended address=e, or the person responsible for delivering it to the intended addressee, =ou may not copy, disclose, distribute, disseminate or deliver it to anyone=else or use it in any unauthorised manner or take or omit to take any acti=n in reliance on it. To do so is prohibited and may be unlawful. The views=expressed in this e-mail may not be those of the Company from which it has=come but the personal views of the originator. If you receive this e-mail =n error, please advise the sender immediately by using the reply facility =n your e-mail software. Please also delete this e- mail and all documents a=tached immediately. Many thanks for your co-operation. Registered Office: 42-44 Portman Road, Reading, Berkshire, RG30 lEA.=Registered No OC331798 2 EFTA_R1_01672734 EFTA02530185  Landon Thomas, Jr. Financia= Correspondent New York Times =ion ******** ••••• ******* • ******* ***** The information contained in this c=mmunication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the a=dressee. It is the property of Jeffrey Epstein Unauthorized use, di=closure or copying of this communication or any part thereof is strictl= prohibited and may be unlawful. If you have received this communication in error, p=ease notify us immediately by return e-mail or by e-mail to [email protected], and destroy thi= communication and all copies thereof, including all attachments. 3 EFTA_R1_01672735 EFTA02530186