The USD gained a stunning 5.3% versus the Colombian peso (COP) last Thursday, largely on the heels of remarks by President Uribe that the government is working to stem the gains in the COP and create a more ‘competitive’ peso. The movement of the currency reflects more than Presidential rhetoric and the drop in the S&P alone. The Central Bank moved its originally scheduled monetary policy meeting from this Friday, June 27 to the prior Friday, June 20. At the meeting last Friday, the Central Bank maintained the policy rate at 9.75% relative to mixed expectations regarding the potential for [...]
Entries Tagged as 'EM Market Overview'
Emerging Currencies Stragegy - June 2008
June 28th, 2008 · No Comments
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Emerging Markets Update - June 19 2008
June 19th, 2008 · No Comments
South Africa The current account deficit worsened to a 26-year high in the first quarter, while a robust headline financial account balanced masked underlying weakening that increases concerns about financing going forward. The annualized current account deficit rose to 9.0% of GDP, much worse than in Q4 and than expected by the consensus. While manufacturing benefited from the weaker rand, the volume of mining exports dropped by 9% qoq due to power shortages, although rapidly rising commodity prices still allowed an 8% in export value. However, high world energy prices boosted imports even more, by 12% qoq. The financial account [...]
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Forex Market Comments - Emerging Markets - June 16 2008
June 16th, 2008 · No Comments
Israel Over the weekend, May CPI rose to a 5½ year high of 5.4% yoy from 4.7% in April, a touch weaker than expectations. Food price was the main driver, up by 1.9% mom/ 12.5% yoy, while housing costs advanced by 0.1% mom/ 2.4% yoy. Upside pressures from food and fuel prices, coupled with receding disinflation impact from the strong ILS vs. USD (as rental contracts are increasingly priced in ILS rather than USD), require further monetary tightening, with a 25bp hike to 3.75% at the June 23 BoI rate-setting meeting likely, in our view.
China May industrial production grew by [...]
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Emerging Markets Morning Update - May 20, 2008
May 20th, 2008 · No Comments
Russia Industrial production grew 9.2%yoy in April, that is 200bps higher than consensus and 270bps higher than the last reading. Even this extremely healthy growth, however, understates the strength of the Russian economy: manufacturing was up 14.5%, while the large mining sector expanded barely at all. In sum, Russia remains one of the few bright spots in the global
economy. Likewise, both growth and inflation look likely to exceed our present projections.
China A senior economist with the National Development and Reform Commission assured that the earthquake will not shake economic confidence and urged the government to stay on the current policy [...]
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FX Emerging Markets - May 19, 2008
May 19th, 2008 · No Comments
Argentina In recent days, the USD/ARS move quickly higher from 3.16 to 3.19 on the heels of strikes in the agricultural sector and concern regarding the prospect for a further move higher. Although the government will likely experience on-going challenges, the probability of a sharp move higher is extremely low in the near term. First, USD/ARS has already drifted back to 3.16…thanks to some intervention from the BCRA. Second, the current account should remain in surplus in excess of 2.5% of
GDP. Third, international reserves now represent over 8 months of import coverage. In fact, even if BCRA more actively stepped [...]
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