Emerging market currencies and geopolitics at the centre stage – Danske Bank
Analysts at Danske Bank note that the collapse of the Argentinian Peso accelerated yesterday after President Macri called for the IMF to accelerate disbursement under its standby programme amid rapidly deteriorating market sentiment.
Key Quotes
“The Argentinian central bank hiked its benchmark rate from 45% to 60% in a forceful attempt to shore up confidence. However, despite the hike, the Peso continued to weaken.”
“USD/INR hit an all-time high yesterday, climbing 0.8% in the past three days as oil price continue to climb. India is a net oil exporter and the country's external balance depends heavily on oil price developments. The US is mulling over sanctions against India for purchasing Russian arms (>USD5bn deal). India is following Turkey in its plans to buy Russian S-400 missile air defence systems.”
“China s manufacturing PMI rose to 51.3 in August from 51.0 and non-manufacturing PMI increased to 54.2 from 53.7. The stronger data is unlikely to help sentiment with regards to the Chinese economy as the US is apparently planning to impose USD200bn of new tariffs on Chinese imports faster than previously expected.”
“That was not the only trade war-related news out overnight. US President Trump also threatened to pull the US out of the World Trade Organisation and he also rejected an offer from the EU to remove levies on cars. The US-Canada trade talks are said to have made progress ahead of a deadline today.”
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