The
Thai Baht, Malaysian Ringgit, Chinese Yuan, Indonesian Rupiah and Indian Rupee
are all trading lower at time of writing. The Indian Rupee has in fact softened
as much as 0.6% to meet a new intraday low, which is the weakest level on
record according to Bloomberg data going back to the beginning of 1973.
The
weakness in the Rupee is very much correlated to the Dollar strength that is
hammering emerging markets but concerns over a meeting this week in New Delhi
between Indian officials and US trade representatives to calm trade tensions
have also weighed on local sentiment. Speculation that the United States has
told India to weaken its dependence on Iranian oil also appears to have
impacted investor sentiment. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Another
factor that is weighing on the emerging market sentiment is the positive
turnaround in USD momentum over recent trading sessions. The USD has made an
attempt to re-challenge 2018 highs after speculation circulated on Wednesday
that President Trump might be adopting a softer tone on China.
Reports
that the United States will not impose restrictions on Chinese investment in US
technology firms were initially met with optimism that the trade war narrative
between the two largest economies in the world would take a breather. White
House economic advisor, Larry Kudlow,
quickly squashed that optimism when he commented that the US administration’s
latest approach towards China shouldn’t be seen as a retreat.
The
comments from Kudlow are likely to ensure that there is still an atmosphere of
risk aversion across trading. This means that global stocks are likely to trade
cautiously with a lack of risk appetite encouraging the ongoing lack of buying
momentum for emerging market currencies. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html Year-to-date there are
only two emerging market currencies that have traded higher against the Dollar,
with this being the Colombian Peso
and Malaysian Ringgit. The gains in
the Malaysian Ringgit this year are getting smaller by the day with the advance
in the Ringgit now standing at just below 0.2%. There is a likelihood that by
next week the Colombian Peso could stand on its own as the only emerging market
currency to have advanced against the Dollar this year.
Concerns
over emerging market weakness are naturally going to raise questions over
whether central banks will intervene in the market to protect their respective
currency. This could come in the form of direct intervention in the foreign
exchange market or raising interest rates in an effort to attract investors
back into their respective market.
However,
it should not be understated that what we are seeing in the FX market is a very
broad-based Dollar rally. This means that the advancement in the Dollar is the
main catalyst behind emerging market weakness, and the weakness in emerging
market currencies is something that is being mirrored across their
counterparts.
Speculation
is high that Bank Indonesia might raise interest rates once again before the
end of today to prevent the Rupiah from hitting further milestone lows against
the Dollar. Traders have previously rejected each of the recent interest rate
increases by Bank Indonesia, and I do feel that the risk remains current that a
central bank interest rate increase from any emerging market central bank could
only encourage a near-term impact for their currency.
For as
long as buying the Dollar continues to be the trend of the FX market, there is
very little emerging markets can do to prevent weakness. Any break in emerging
market currency weakness ahead could also be a temporary measure.
Have you heard this? Many
Nigerian exporters have been defrauded of huge amount of money in the process
of exporting commodities to foreign countries. Do you know why? They were not
trained on export operations, management, documentations and the best methods
of payment in export trade. This is terrible!!! Nigerians cannot continue to
lose money to foreigners in the course of export business. Exporters, why don’t
you get a practical manual that teaches the stages of export trade from
processing and packaging of commodities to receipt of payment by the foreign
buyers. It teaches export operations, export management, export documentations
and methods of payment in export trade? It is a contemporary step-by-step guide
to export trade. It tells all the contemporary dynamics in export trade. To get
it, click on the link below:
Hmmm!!! Folks, have you ever
imagined how the financial status of your firm will be when more than 20,000
CEOs and other key decision makers of blue-chip corporations pay for your
products and services or even give you very juicy deals. The link below will
tell you more: http://www.tectono-business.com/2015/07/tectono-business-review-in-conjunction_21.html
No comments:
Post a Comment