Currencies

VIDEO: Interview with Michael Dunning, Head of Corporate Ratings, EMEA, Fitch Ratings

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 banking sector clean-up and the prospects of the rouble.

Interest Rates in Brazil: If Only It Were That Easy

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

Russia spent much of last year bolstering its ties to the Chinese economy in the hopes of tapping into Asian liquidity through the capital markets, most recently revealing plans to set up a Russian Central Bank outpost in Beijing. The move is a fairly sizable leap towards Russia’s first sovereign yuan-denominated issuance, and a signal that it is still keen to hedge against bets that its relationship with Western powers would improve with Trump in the White House and Europe in relative disarray.

Time for Caution on Inflation in Brazil

Inflation targets are widely used by Central Banks throughout the world. In countries with moderate inflation, this regime helps keep inflation well behaved, with less cost to economic activity. In countries with low inflation, the risk of deflation can be mitigated by setting a suitable target. This targeting also makes monetary policy more predictable, contributing to a stable economic environment, but defining an ideal target is an imperfect science at best.

CBK Governor on the Trump Effect, Banking Sector Risks, and the Promise of Green Finance

Having weathered most of 2016 quite well, Kenya faces a number of domestic and external headwinds including a prolonged drought and increasing uncertainty around the future policy direction in the US, UK and Europe. But Patrick Njoroge, Governor of the Central Bank of Kenya believes some of these challenges also present opportunities – to explore further East African policy integration, double down on helping banks navigate new challenges, and facilitate the development of new and innovative financial instruments like green bonds.

Will Mexico’s Currency Gambit Pay Off?

Few currencies have suffered more since the surprise election of Donald Trump last year than the Mexican peso. Trump made Mexico a cornerstone of his electoral campaign and attacked the Central American country on a number of issues ranging from illegal immigration to the renegotiation of the North American Trade Agreement (NAFTA), which put increasing pressure on the country’s currency and drove the country’s Central Bank to take drastic measures. Will the gambit pay off?

Clearing a Path for Local Currency Markets in Latin America

Many Latin American countries are looking to bolster their capital markets and make them more accessible to foreign investors lured to the region in search for higher returns, with clearing and settlement platforms playing a starring role.

Are Rate Hikes Enough to Stabilise the Lira?

Turkey’s Central Bank pressed on with a 50bp interest rate hike in November despite persistent criticism from President Recep Tayyip Erdogan, and held its benchmark one-week repo rate at 8% at the latest meeting in January – despite market expectations. Analysts believe the move won’t be enough to stem the currency’s decline, with further rate hikes expected – which could provoke further intervention, hurting investment.

Colombia’s Central Bank Chief Vows to Aim for Inflation Target Despite Headwinds

Juan Jose Echavarria, the new Governor of Colombia’s Central Bank, has come into the job at a time of uncertainty for global markets. With inflationary pressures simmering, countered by the need to boost growth through tightening, Bonds & Loans asked the country’s top banker about the legacy he has inherited and how the Bank plans to navigate the challenging economic landscape ahead.

Investors Think the Pendulum Could Swing Back on Argentina

Argentina, Latin America’s third largest economy, came roaring back to the markets in 2016 after a 15-year hiatus following its historic default on US$95bn of debt, and the first months of 2017 has shown few signs of deal flow letting up. But some investors are growing increasingly concerned that softer than expected growth and persistently high inflation may threaten the ability of Argentinian entities to repay investors.

 

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