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Emerging Markets Briefer
Who will benefit if the dollar shines?
Thu, Apr 10 2008, 14:54 GMT
by Danske Research EmergingMarkets Team
What happens when USD rebounds?
- • A seven-year weakening trend in the dollar against the euro might be coming to an end. If this is the case, it will have a significant impact on Emerging Markets currencies as well.
- • EM currencies like the CEE currencies tend to move in sync with euro, while other EM currencies like most Asian and LATAM currencies tend to move in sync with the dollar. Furthermore a strengthening of the dollar will naturally lead to a strengthening of the currencies that are directly or indirectly linked to the dollar such as the Chinese renminbi, most of the currencies in the Gulf states and the Russian rouble.
In Asia higher food and energy prices takes its toll
- • A rebound in USD is a strong argument for being long in the Asian EM currencies versus the CEE currencies. That said the recent spike in crude oil and food prices is starting to take its toll on some of the Asian currencies.
- • KRW and PHP currently look most vulnerable. South Korea is fast turning into a deficit country because of its dependence of energy and commodity imports and in the Philippines sharply higher food risks creating political havoc. We currently regard SGD, MYR, THB and TWD as the best bets on stronger Asian currencies.
Published on Wed, May 7 2008, 07:36 GMT
Archive
- The credibility game intensifies
Published On Fri, Jul 4 2008, 14:48 GMT - The credibility game
Published On Tue, Jun 3 2008, 08:37 GMT - Who will benefit if the dollar shines?
Published On Thu, Apr 10 2008, 14:54 GMT - Central banks react to currency weakness
Published On Thu, Apr 3 2008, 08:27 GMT - Boom in commodity land
Published On Wed, Mar 5 2008, 08:26 GMT
Danske Bank
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