5 Jan 2015
EM countries to become more vigilant if USD continues the bull trend – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team expect that EM countries will become more vigilant about the speed of currency weakness should the dollar continue to strengthen.
Key Quotes
“EM has started the year by extending many of the trends present towards the end of last year. The ruble is on the defensive along with Brazilian assets, while the Shanghai Composite continues to rally.”
“The continued fall in oil prices will also ensure that the trading dynamics of importers vs. exporters will remain intact.”
“But soon, we will be reaching the point in which secondary impacts will start to be counted as well. For example, the potential boost to the US economy from lower oil prices could counter some of the negative effect of lower energy exports for Mexico.”
“On the policy side, Turkey has taken further steps to secure USD liquidity as the Fed starts to tighten. Several other EM countries will also be vigilant about the speed of currency weakness should the dollar bullish trend continue, as we expect.”
Key Quotes
“EM has started the year by extending many of the trends present towards the end of last year. The ruble is on the defensive along with Brazilian assets, while the Shanghai Composite continues to rally.”
“The continued fall in oil prices will also ensure that the trading dynamics of importers vs. exporters will remain intact.”
“But soon, we will be reaching the point in which secondary impacts will start to be counted as well. For example, the potential boost to the US economy from lower oil prices could counter some of the negative effect of lower energy exports for Mexico.”
“On the policy side, Turkey has taken further steps to secure USD liquidity as the Fed starts to tighten. Several other EM countries will also be vigilant about the speed of currency weakness should the dollar bullish trend continue, as we expect.”