The
majority of emerging market currencies across Asia are trending lower at time
of writing, as the political dispute between Turkey and the United States heats
up and the US Dollar charges to another milestone high for 2018. The softness
in the emerging market currencies will likely spread into the EMEA region when
European markets open today and possibly Latin America FX when Wall Street
opens this afternoon.
The
only real exception to the weakness in the emerging market FX space in Asia has
been the Indian Rupee, which is marginally higher against the US Dollar after
hitting a new all-time low earlier in the week. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
When
you consider that the Dollar is charging ahead against the majority of its
counterparts after reaching another 2018 high, suspicions will be present in
the market that the Reserve Bank of India (RBI) might have intervened in the FX
market to strengthen the Indian Rupee. Bank Indonesia (BI) have only moments
ago raised interest rates in an effort to defend the Indonesian Rupiah from
further weakness. Previous attempts from BI to change monetary policy have
previously been rejected by investors, mostly because of the continued USD
buying drive.
Elsewhere,
the Turkish Lira continues to rapidly seesaw in momentum, but appears on track
to be attempting its third successive day of gains against the US Dollar after
the Turkish Lira crisis attracted the world’s attention. The gains in the Lira
have come in spite of Turkey increasing tariffs on imports across a range of
different US products. It will be interesting to monitor whether a potential
response to this from the Trump administration later down the line rattles the
markets. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
The
escalation of both diplomatic and trade tensions between the United States and
Turkey has reminded investors that it is not just the United States and China
that stand at the heart of the global trade war concerns. There are many other
economies across the globe that feel aggravated by the protectionist nature of
the Trump administration.
One
question that is emerging across the headlines for investors to take into
account as the Dollar hits another high for 2018 is - exactly how long can the
Dollar rally continue? A stronger Dollar is the opposite of what the Trump
administration wants to see, and there is an argument to be made that it
offsets both the fiscal stimulus that Trump has encouraged alongside the
protectionist policies as the price of imports into the United States
increases.
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