Falling unemployment, improving exports and a rush back into emerging markets assets gave investors plenty of reasons to buy the South Korean won on Wednesday.

But they are not enough to explain the size of the swing in the exchange rate – a rise of more than 1 per cent to a six year high of 1041.75 against the dollar.

Could that be due to a shift in the stance of South Korean policy makers? Continue reading »

When the Pope met Queen Elizabeth on Thursday, there was one thing – doubtless to Argentine President Cristina Fernández’s great dismay – which was not on the agenda: the Falkland Islands (or, as the Argentine Pope might have called them, Las Malvinas).

As if to make up for that omission, Fernández ensured the disputed territory’s continued presence in Argentines’ minds by printing a map of the archipelago on a new 50 peso note (worth just over $6), with a stirring image of a gaucho who rose up against British rule in 1833 on the other side. Continue reading »

Well, that didn’t last long.


Venezuela launched its long-awaited Sicad 2 dollar market on Monday, in what many hoped would be a step towards normalisation of the country’s dysfunctional foreign exchange market. Continue reading »

The Zambian kwacha has been one of the weakest currencies against the US dollar this year, losing more than 8 per cent of its value against the world’s reserve currency during the past month alone.

Source: Thomson Reuters

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Source: Thomson Reuters

Ukraine’s central bank is doing what it can to protect the hryvnia. Continue reading »

We did this a couple of days ago but here it is again: the $1.6bn bond of Naftogaz, Ukraine’s state gas company, due on September 30. If 30 per cent in less than eight months wasn’t apocalyptic enough, its yield has now gone to 34 per cent and counting. Does this look like some kind of endgame?

Source: Thomson Reuters

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Only last week, Nomura’s Peter Attard Montalto warned that Hungary’s central bank “appears to be playing with fire” in its insistence that “Hungary is different” and that – with inflation at all time lows – it can continue its rate cutting policy regardless of the bigger world out there.

Montalto published that on Thursday, when the forint had recovered from the worst of the buffeting it received earlier in the week, to trade in a range around Ft308 to the euro. Continue reading »

Source: National Bank of Ukraine

Foreign currency reserves of crisis-hit Ukraine plunged $2.6bn in January, the country’s central bank revealed on Friday hours after introducing fresh capital controls that bankers warned could choke trade and boost black market business activity. Continue reading »

The bad old days of hyperinflation

In a week where currency after currency in the emerging markets have been battered, it’s nice to keep your options open. In which case, Zimbabwe seems to have the right idea. Its citizens can now pick any of nine currencies to use.

As of Wednesday, four new currencies are legal tender in the southern African state: the Australian dollar, the Chinese yuan, the Indian rupee and the Japanese yen. Continue reading »

The Hungarian forint set off on a roller coaster ride on Wednesday, buoyed at first by optimism and then buffeted by a sell-off across emerging market currencies, exacerbated by dovish signals from policy makers at home. The forint fell to as much as Ft310 to the euro, its weakest level in more than a year and a drop of 2.1 per cent from Tuesday’s close of Ft303.6. Continue reading »

One of the less remarked-on pieces of news out of Turkey on Wednesday was a statement from the central bank that it has ditched its “additional monetary tightening” facility, under which its overnight interest rate used to be bumped up a bit from time to time in a not very transparent manner.

In so doing, the CBRT has removed one more out of several unorthodox aspects of its monetary policy that have so bothered investors. But how complete is the bank’s conversion to the straight and narrow? Continue reading »

For all the talk of differentiation, emerging markets are having a bad Monday. Major currencies, such as the Turkish lira and Indian rupee have been hit; equity and bond markets are falling. As Benoit Anne of Société Générale put it, “global emerging markets are now trading in full-blown panic mode”.

But the recent message to investors from analysts was to look beyond emerging markets as a single asset class. “The real lesson from recent events is that the need for investors to discriminate between individual EMs has never been greater,” said Neil Shearing of Capital Economics. Clearly, the lessons are not being heeded. Continue reading »