Emerging Markets Briefer

Boom in commodity land

Wed, Mar 5 2008, 08:26 GMT
by Danske Research EmergingMarkets Team

Danske Bank A/S


Commodity land is decoupling

  • • In the previous edition of this publication we highlighted the fact that it seems like the financial markets had lost confidence in the “decoupling story” – hence, that the financial markets apparently no longer believe that the Emerging Markets could avoid the negative impact from the slowdown in US growth.
  • • However, since then, another decoupling story is beginning to become apparent. This is the story of the growth boom in what we could call ‘Commodity land’ – the commodity-exporting countries.

Investors have rewarded commodity exporters

  • • The commodity boom has clearly supported the Commodity land’s currencies, while the commodity importers are beginning to show signs of strain.
  • • Most notable is the relative performance between the Brazilian real (BRL) and the Turkish lira (TRY). While BRL has appreciated almost 7% vis-à-vis USD since the beginning of the year, TRY has lost more than 3%. These two currencies have over the last couple of years tended to go together rather than in opposite directions.

Published on  Wed, Mar 5 2008, 08:38 GMT

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