For more than three decades, Chile was the poster child of neo-liberalism, the country that followed diligently the IMF playbook. Such discipline was rewarded with impressive growth and the envy of its Latin American peers. By 2010, pundits predicted that Chile was but a few years shy of becoming Latin America’s first “developed” nation. The latest down-cycle, marked by both low copper prices and the flirting with expanded government, created a new set of obstacles for Chile. The question hovering over voters ahead of the Presidential elections in November is, “Can Chile get its groove back?”
Strong signalling and early exit from the currency cap allowed the Czech Central Bank to avoid FX volatility, but currency traders were left in limbo as a Swiss-style post-flotation appreciation failed to materialise.
Managing the financing strategy for any company, whether a large multinational or small start-up, is challenging during the best of times, and when an economy slumps, most CFOs will tell you that how you come out during an upturn largely depends on how you position yourself before the downturn.
Low oil prices and a strong dollar are putting pressure on GCC currencies, forcing the Gulf countries to continue with painful fiscal consolidation. But, analysts expect the region to stick to its policy of pegging against the dollar – for now.
We believe the Fed is on track to hike at least three times this year. Yet EM currencies were mostly firmer in Q1, despite Fed tightening typically being very disruptive to EM. Why? The US dollar lost some traction as markets pushed out Fed tightening beyond March and Treasury Secretary Mnuchin seemed to push out fiscal stimulus into 2018. Rising commodity prices also helped buoy EM.
In the aftermath of the financial crisis, the US largely benefited from having a strong dollar on its path to recovery. Ten years later, however, the same currency’s value is so distorted that it may well be enough to strangle its economy.
The sacking of South Africa’s finance minister and his cabinet prompted another all-too-familiar slide in the rand and bond prices. As his successor takes office, the markets are tentatively awaiting signs about the direction of economic policy.
Over the past year Nigeria's economy, hit by rising inflation, low FX reserves and deflated oil price, shrank by about 1.6%. But with a better market outlook on the horizon, as evident from the recent success of a US$1bn Eurobond, the Bonds & Loans Nigeria Special Report looks into what 2017 may bring.
Bonds & Loans spoke with Michael Dunning, Regional Head of Analytics Group in EMEA Region for Fitch, about the success of Russia's macro outlook for 2017, the success of the banking sector clean-up and the prospects of the rouble.
The concern over high interest rates in Brazil is understandable. It impacts the public coffers in favour of the richest and discourages productive investment. Many analysts argue that the interest rate is too high, and that the main reason for its inaction is pressure from special interest groups, notably the financial market. Although this argument is seductive for its simplicity, it does not jibe with the complexity of the theme.
- With Russia’s CB Moving to China, Sovereign Yuan Eurobond Moves One Leap Closer
- Time for Caution on Inflation in Brazil
- CBK Governor on the Trump Effect, Banking Sector Risks, and the Promise of Green Finance
- Will Mexico’s Currency Gambit Pay Off?
- Clearing a Path for Local Currency Markets in Latin America
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