By Baz Yen
Yen Compound city, Urce IV, Urce Sector
Nova Crystals continue depreciating, selling recently for less than half the official exchange rate. The price has been spiraling downward since The Krath government collapsed 6 months ago.
On Year 19 Day 48, the market was bewildered to learn The Krath renamed itself Not Krath. Shortly afterwards, The Krath government dissolved and abandoned the technology for creating Nova Crystals. Remnants of The Krath are involved in manufacturing enterprises. But The Krath no longer sell Nova Crystals on major markets.
One head of state criticized Krath monetary policy. Simkin Dragoneel, king of The Faerytail Family, remarked: "Now instead of actually making Nova Crystals for hardly any cost, they just issue Electronic Nova Crystals, or whatever they wish to call Nova Crystals that don't actually exist."
Traders are skeptical of the official exchange rate of 200,315 credits per Nova Crystal. That rate has remained frozen for the past 16 months, oblivious to economic and political developments. Traders have factored in risk, repricing Nova Crystals to an average exchange rate of 187,300 credits.
Nova Crystals have been plunging since the collapse of The Krath government
Recent trades have been well below that market average. The most recent sale of standard Nova Crystals on Centrepoint Marketplace was for a mere 100,000 credits. On the Trade Federation's Market, traders have completely shunned The Krath's currency. Transactions denominated in Nova Crystals are increasingly rare, demonstrating the failure of the currency.
The market formerly regarded Nova Crystals as a minor but viable financial instrument. The currency originally aimed to mirror The Krath economy. The expectation was that economic growth in Krath planets would lead to currency appreciation. Indeed, ten years after its introduction, its value gradually has increased substantially.
But a devaluation damaged public confidence. Monthly fluctuations were once normal. However, in Year 14 The Krath devalued Nova Crystals by 82%, from 279,951 to 50,000 CR/NC. This devaluation was The Krath's reaction, or possibly overreaction, to declining tax revenue. Some considered this policy a bankruptcy reorganization, others called it a scam.
Now Nova Crystals are officially 14% below their peak of 5 and a half years ago. The unchanging exchange rate of the past 16 consecutive months aggravates the wariness of the market. Critics suspect that either Krath planets are economically stagnant, or there is currency manipulation.
King Simkin of The Faerytail Family disputes the legitimacy of Nova Crystals: "Nova Crystals haven't been sound since they dropped the price of them down to 50,000 each after cashing in all their friends' and allies' Crystals for the premium amount right before the drop. Their phony currency is nothing more than a governmental Ponzi scheme that was used to extort credits off the ignorant in order to benefit themselves."
This reporter requested comments from several Krath officials. The officials responded to decline comment.
The credibility of Nova Crystals is waning. Still, The Krath may deploy a plunge protection team in an attempt to boost its currency. But market sentiment toward Nova Crystals appears long-term bearish.
Disclosure:
This reporter owns a significant amount of Nova Crystals.
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