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Friday, December 02, 2016 9:03:38 AM
Long-Term EM Currency Trends
* December 1, 2016
Poor economic fundamentals should drag EM currencies lower.
Despite the latest pullback in EM currencies, the EM ex-China real effective exchange rate is still elevated. Given their poor productivity growth outlook, the real effective exchange rates will be inclined to depreciate. Furthermore, to limit the upside in domestic interest rates – both in bond yields and interbank rates – many developing nations’ central banks will inject more local currency liquidity into their financial systems. This might help cap local interest rates, but will be bearish for their currencies.
Bottom Line: EM exchange rates will continue depreciating. Our EM strategists recommend short positions in the following basket of currencies versus the U.S. dollar: KRW, MYR, IDR, TRY, ZAR, BRL, COP and CLP.
https://blog.bcaresearch.com/long-term-em-currency-trends
• DiscoverGold
Click on "In reply to", for Authors past commentaries
* December 1, 2016
Poor economic fundamentals should drag EM currencies lower.
Despite the latest pullback in EM currencies, the EM ex-China real effective exchange rate is still elevated. Given their poor productivity growth outlook, the real effective exchange rates will be inclined to depreciate. Furthermore, to limit the upside in domestic interest rates – both in bond yields and interbank rates – many developing nations’ central banks will inject more local currency liquidity into their financial systems. This might help cap local interest rates, but will be bearish for their currencies.
Bottom Line: EM exchange rates will continue depreciating. Our EM strategists recommend short positions in the following basket of currencies versus the U.S. dollar: KRW, MYR, IDR, TRY, ZAR, BRL, COP and CLP.
https://blog.bcaresearch.com/long-term-em-currency-trends
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
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