Daily Archives: Sep 22, 2011

In the middle of the global gloom and doom this week, at least one senior G-20 official was grinning like a Cheshire cat.

When the FT met him in Washington, Guido Mantega, the Brazilian finance minister and author of Brazil’s currency wars, was exuberant as his old enemy, the dollar, continued to gain strength against Brazil’s currency, the real.  Read more

If anyone needed reminding about the hopelessly haphazard workings of Hugo Chavez’s administration, a prime example was served up this week in the confusion over how much Exxon Mobil might be compensated for assets nationalised in 2007.

No sooner were observers pleasantly surprised by the almost bizarrely conciliatory statements from the government’s prosecutor general, than they were unceremoniously snapped out of their reverie by the energy minister’s equally belligerent reaction. Read more

cryingSo much for that relief rally.

Banking shares across central and eastern Europe dived again on Thursday, a horror day for all kinds of markets across the world, confirming that the turmoil in the financial sector was not just a summer squall.

Things got so bad that shares in Hungary’s OTP had to be suspended from trading at one point after they fell more than 10 per cent and breached the intraday trading limit.  Read more

Currency traders in SeoulAfter the flight from emerging market equities and foreign exchange, comes a move out of EM local currency bonds.

With investors’ nerves breaking in the face of the bad news emanating from the US and the eurozone, some fund managers have started selling EM local currency bond holdings,  notably in Brazil, South Africa and Indonesia. Read more

Poland may have some of the most solid fiscal indicators in the European Union, but that is not saving it from being savaged by risk aversion, as investors flee emerging Europe causing the zloty to fall to dangerous levels against the dollar, the euro and the Swiss franc.

The Polish zloty is being hammered – falling by 0.79 per cent to 4.50 zlotys to the euro, by 2.2 per cent to 3.34 zlotys to the dollar, and dropping 1.4 per cent to 3.72 against the Swiss franc in trading on Thursday. Read more

Which way will the Brazilian real go now? Not back up by the look of it, even after losing as much as a quarter of its value against the US dollar over the past month.

The real touched R$1.94 to the dollar on Thursday morning before climbing back to below R$1.87 in mid-session after the central bank began selling dollars. But the bank’s target was volatility, not the rate itself. Technocrats and politicians alike seem happy for the real to stay weak. Read more

By Mohsin Lahkim

Royal Air Maroc is not flying so high these days. The problems that have engulfed Morocco’s flag carrier came to a head on Thursday after the government moved to shore up the airline’s finance with a 1.6bn dirham ($193.3m) bailout.

According to Reuters, the funds are part of a five-year 9.3bn dirham package aimed at helping Africa’s third largest airline cut its workforce by 30 per cent to around 4,000, renew its fleet to reduce fuel consumption, and revamp its operations. Read more

South Africa’s Reserve Bank kept interest rates unchanged at 5.5 per cent on Thursday, while acknowledging that gloomy growth prospects and upward pressure on inflation pose a challenge to monetary policy.

The move was in line with most economists’ forecasts, but the deterioration in both the domestic and global outlook since the last monetary policy committee meeting in July has caused some to predict a rate cut before the end of the year. Read more

Pin-striped diamond merchants from Antwerp, Tel Aviv, India, and New York will soon have to come to Gaborone in Botswana to bid for some of the world’s best diamonds, after the country struck a landmark deal with De Beers that makes it a power player in the global diamond industry. Read more

In a country where most adverts feature celebrities such as cricket legend Sachin Tendulkar or Bollywood stars, an overseas phonemaker and an author seem like an unlikely, if interesting, pairing.

India’s best-selling author, Chetan Bhagat (left), has been signed up by Chinese telecoms company Huawei to launch its latest tablets and smartphones on the subcontinent, the Economic Times reportsRead more

Traders said Brazil’s central bank began selling dollars on Thursday as the real touched R$1.94 to the dollar, its weakest level since July 2009.

The real has plummeted along with risk assets around the world as investors are gripped by pessimism over the global economy. But the real has been hit especially hard, its downward slide hurried along by a recent cut in interest rates and statements from Guido Mantega, finance minister, suggesting the government is happy to see a weaker currency – which will boost export competitiveness – and is not worried by its potential impact on inflation.

Have you ever had the opportunity to put questions to a top Russian economic policymaker? Now’s your chance.

Alexei Ulyukayev, the deputy head of Russia’s central bank,  has agreed to answer questions from beyondbrics in an exclusive readers’ interview.

Growth prospects? Financial reforms?  Monetary policy? Ulyukayev has agreed to cover a wide range of issues.  Read on to find out how you can put your questions. But please be quick. The deadline is Friday. Read more

Latin currencies opened sharply down on Thursday, joining the global fire sale in risk assets. The Chilean peso – down 3 per cent in pre-session trading – was down nearly 4 per cent at 13:05 BST. The Brazilian real, which fell 4.25 per cent against the dollar on Wednesday, was down 1.8 per cent at about R$1.92 to the US dollar, its lowest level for more than two years. Read more

Indian shares have suffered their biggest fall in two years, rounding off a torrid day in Asia on Thursday. The Bombay stock exchange’s Sensex closed down 4.1 per cent, following falls of 8.9 per cent in Jakarta, 4.8 per cent in Hong Kong and 2.9 per cent in South Korea.

Emerging markets in the European timezone are equally weak, with Russia’s Micex 6.5 per cent, Hungarian stocks down 4.4 per cent, Poland’s 4.8 per cent and Turkey 3.8 per cent. Concern about the US and the eurozone is everywhere…

* Risk assets rattled by Fed’s bleak outlook and China’s slowing factory output

* US agrees $5.9bn arms deal with Taiwan

* $23bn windfall for new Libya Read more

Taiwan has long had strong cultural ties and affinity with Japan, given the 50 years of Japanese colonial rule over the island to 1945. Economically, however, it has been a bit of a love-hate relationship, with cheap Taiwanese manufactured goods often competing with and taking market share away from their Japanese counterparts.

That could change, after Taiwan and Japan on Thursday signed a trade and investment agreement that includes investment protection and promotion. The agreement comes amid renewed Japanese interest in investing in Taiwan. Read more

Thursday’s top picks from the beyondbrics team: Dilma Rousseff, president of Brazil, on Brazil’s answer to the currency war; why a floating rouble is good for the Russian economy; and why the Indian government’s pain should not be wasted.  Read more

First Indonesia fell into the red, now even the most impervious Asian asset has come under pressure: the redback. The renminbi NDF market – essentially a 12-month forward contract on the Chinese currency – is, as of today, pricing in depreciation.

While the NDF market is not as reliable an indicator of future gains as it used to be, the market now appears to be contemplating a return to the de facto dollar peg of 2008, or an outright fall. Read more

[UPDATED WITH CLOSING PRICE] Indonesia has been fairly sheltered from recent global market turmoil by its booming domestic economy and soaring investor confidence. But the external gloom finally became too much on Thursday, driving the Jakarta stock exchange down a whopping 8.9 per cent, as equities fell across the region.

“It’s like all the gains were gone in seconds,” said Lana Soelistianingsih, an economist at Samuel Sekuritas, a local brokerage. Read more

A few weeks ago, the debate surrounding Mexico’s central bank was about the timing of lowering interest rates to offset softening economies in the US and at home.

This week, and after yet another rough day for the peso, the debate is starting to centre on what exactly the bank should do to firm the sliding currency. Read more