"The less you know, the better you sleep" — Russian proverb
Tag: Foreign exchange
The Chinese Renminbi has experienced its biggest weekly slide against the USD in many years…and it continues. Further weakening is likely. Seasonally weaker Chinese data in late spring could provide further motivation for the government to weaken the CNY via the policy mix. Expect more volatility as the CNY band is to be widened to (+/-) 1½-2% after China’s National People’s Congress on March 5th.
Ukraine is playing a dangerous game of time. By delaying the announcement of the interim government and thus any financial aid, the Ukrainian authorities are putting additional pressure on an already pressured economy. Risks of a sovereign default, further devaluations and a bank run continue to smoulder – but it’s not all bad.
After a month of positive sentiment towards Turkey, the lira took a turn for the worse late in yesterday’s trading session and depreciated more than 2% against the dollar and the euro. Not too surprisingly, the trigger came from the political arena.
A new government needs to be established before Ukraine can receive aid from the EU and the IMF. The financial aid package is very important for keeping Ukraine solvent. Without it, Ukraine is only months away from a default. The temporary government said it needs $35 billion in assistance. If Ukraine fails to receive aid in coming weeks we do not rule out a sharp decline of UAH. In sum, we expect the UAH to continue its weakening trend with risk of an effective currency devaluation by 15-20%.
I denne utgaven av Navigatøren ser vi nærmere på utviklingen i de fremvoksende økonomiene i vår "top story". Uroen i de fremvoksende økonomiene tidligere i år preget markedet, og her hjemme falt lange renter og EURNOK steg til 8,50.