Chart of the week: who’s afraid of the weakening yen?
Complaining about the effect of Japan’s monetary easing on the value of the yen is virtually de rigeur among the country’s trading partners. But Chart of the week shows that the most vocal critics of Japan are not necessarily those with the most to shout about. Continue reading »
South Korea: won worries
Concerns over possible intervention by the South Korean authorities are growing as the Korean won neared it’s strongest level to the dollar in two-months.
The won ended onshore trading at 1,091.4 per dollar on Tuesday, the strongest since March 8, marking its third consecutive day of gains. Although there were no signs of any major action by local financial authorities, traders are becoming more cautious as the stronger won raises the prospect of intervention. Continue reading »
The Chinese renminbi marched to a record high against the US dollar on Thursday, adding to a recent burst of appreciation and spurring talk that Beijing is poised to soon let the currency trade more freely, reports Simon Rabinovitch.
Over the past three weeks the renminbi has gained 0.6 per cent against the dollar, an unusually fast rise for the tightly controlled Chinese currency and one that has come even as the dollar has been relatively strong. Continue reading »
Thailand: getting worked up about the rising baht
By Jake Maxwell Watts and Gwen Robinson in Bangkok
The heated debate in Thailand about whether the central bank should intervene to stem the biggest rise in the baht in 16 years intensified this week as a survey of Thai companies revealed that almost 10 per cent of entrepreneurs claim they would go out of business if the baht rose further to 27.90 to the dollar.
Thailand’s currency was hovering around 28.90 to the dollar on Thursday, down from 28.56 last week, but still nearly 6 per cent higher than at the beginning of the year. The baht’s steady appreciation has been largely driven by inflows of foreign capital seeking strong returns from Thailand’s booming economy and exiting Japan. Continue reading »
African currencies are at risk of depreciation at a time of unprecedented investor interest. Razia Khan, head of Africa research at Standard Chartered Bank, discusses the South African rand and Ghanaian cedi with the FT’s Africa editor, William Wallis, and considers whether this recent development is a country-specific issue or reflects a broader trend across the continent.
Thai baht: gone too far?
The Thai baht hit a 16-year record on Tuesday, appreciating another 0.8 per cent and falling below 29 to the dollar for the first time since the Asian financial crisis of 1997.
The baht touched 28.93 to the dollar at one point, before weakening to just over 29. It’s a worry for policy makers, who have seen the baht appreciate by over 5 per cent already this year alone, but who don’t seem to have a lot of options. Continue reading »
Colombia steps up currency fight
Get ready to rumble. Colombia is stepping up the fight against the appreciation of its currency, the peso.
Having spent nearly $5bn last year buying dollars to stem the peso’s rise, the government this week said it was willing to deploy double the amount – or $10bn – this year keep the currency in check. Continue reading »
Barclays on EMs: beware bears
Another bearish call on emerging markets, this time from Barclays.
The bank says that the “case for EM assets is becoming more challenging” as equities have disappointed while in fixed income expected returns have fallen and the risks have risen.
But don’t give up, says the bank in a report published this week. Look for opportunities in “idiosyncratic factors” in specific markets. Continue reading »
Hungary: forint tumbles as Matolcsy and Orbán make their moves
The Hungarian forint plunged through the 300 per euro barrier on Monday as investors digested unexpectedly speedy moves by György Matolcsy, prime minister Viktor Orbán’s new man at the central bank, to impose his “non-traditional” brand of monetary policy.
Adding to the gloom was a warning that Orbán’s latest round of constitutional amendments, due to be voted on in parliament on Monday, may contravene European Union law. Continue reading »
Poland’s rate cut: a shocker
Central banks are rarely the kinds of places that get pulses racing but the rate setting committee at the National Bank of Poland has long been fairly unorthodox in its communication policy, which is why analysts were floored by a surprising decision to cut the benchmark rate by half a point Wednesday to a record low of 3.25 per cent. Continue reading »
Grillo grins, markets frown
Beppe Grillo
The uncertainty surrounding the Italian election result has upset investors around the globe, not least in emerging markets. While Beppe Grillo, the comedian whose movement won 25 per cent of the vote, may be laughing, fund managers are not.
Following losses on Wall Street, the MSCI Asia ex-Japan index fell 1.2 per cent on Tuesday. Closer to Rome, the impact was bigger, with the MSCI East Europe index down 1.9 per cent in early trading. Watch out for a nervous day. Continue reading »
What’s up with the Mexican peso?
What’s up with the Mexican peso? So far this month, the currency has weakened a little, and on Friday it was trading at 12.67 to the US dollar compared with 12.61 at the start of the month. Could it be that the rally since last year is petering out?
Not likely. Continue reading »
Colombia makes fancy moves in currency war
As Philipp Hildebrand explained in Tuesday’s FT, there is no such thing as a global currency war. But – as John Paul Rathbone outlined the next day – that hasn’t prevented the spread of currency fears across Latin America.
Policy makers have faced those fears in different ways. Munir Jalil and Jose Vicente Romero of Citi Research argue that Colombia has turned to some fancy accounting. Continue reading »
Korea leaves rates and passes forex buck to incoming government
As expected, the Bank of Korea left its policy interest rate unchanged at 2.75 per cent a year on Thursday, citing the country’s gradual economic recovery, even though South Korean exporters are battling strong headwinds from the weaker Japanese yen.
There had been expectations that the central bank might cut rates to boost economic growth and help curb the won’s appreciation against the dollar and the yen. But Kim Choong-soo, BoK governor, said interest rates were already accommodative and, in any event, there was no clear relationship between interest rates and exchange rates in Korea. Continue reading »
[brief] India’s trade deficit widens
India’s trade deficit rose to $20bn in January, according to data published on Wednesday by the Ministry of Commerce and Industry. This is up from a figure of $17.7bn in December. Continue reading »
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