Oil slide takes it to a level that matters for EM FX - Goldman Sachs
|The fall in oil prices since mid-May has gathered pace this week, taking Brent crude to just under $46/bbl which is likely to pose threat for the health of EM FX.
Key Quotes
“Using a “threshold regression” approach, we have found that elasticity of EM FX to oil tends to vary with the level of oil prices, with lower prices (typically below $45-$46/bbl based on Brent crude) associated with a larger elasticity for both oil exporter currencies (RUB, MXN and COP) and also broad EM FX. Taking into account that EM FX has been relatively resilient to the fall in oil prices so far, we would reiterate that lower commodity prices, more than the Fed, are the primary risk to the EM FX complex, especially high-yielders.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.