The Brazilian government and the Banco Central do Brasil (BCB) have presented a comprehensive list of measures to tackle the effects of the credit crunch and clogged up money markets. The extent and size of these measures suggest that policymakers in Brazil have recognised the severity of the crisis and are determined to address these… [Read more]

As I write this, investors are increasingly hopeful that the Bank of Japan (BoJ) will deliver a 25 basis point interest rate cut on Friday, taking policy rates back down to 0.25%. Mere speculation on this front is buoying global financial markets. However, if the BoJ does deliver tomorrow, this begs the question, will Japan… [Read more]

Looking at EM equities these days, one can easily overlook the woods for all the trees. Aside from short-term bounces here and there, the overall direction of stocks continues to point downwards. However, I have started to frequently come across comments such as ‘stocks are oversold’, and ‘valuations are highly attractive’. Well, that may be… [Read more]

Over the past several months, there has been a clear disconnect between credit default swap (CDS) markets and sovereign ratings in the emerging Europe region. While CDS spreads across the board have spiked to record highs, in some cases beyond 1,000 basis points (Kazakhstan, Russia, Ukraine, Latvia), the downgrades from the ratings agencies have been… [Read more]

Amid the continuation of the carnage on global financial market benchmarks in October, it has come to little surprise that emerging market currencies have universally suffered as investors shift asset allocations to perceived safe havens in the US and eurozone. Well, almost universally. One currency in the emerging Europe realm has failed to depreciate against… [Read more]

Having depreciated by more than 38% against the US dollar year-to-date, the South African rand remains one of the worst-performing, major EM currencies. Even the Brazilian real and the Turkish lira, down by 25% and 31% respectively, cannot match the rand’s disastrous performance. While strengthening from a six-and-a-half-year low of ZAR11.8550/US$ on October 22, the… [Read more]

One frequently repeated mantra by optimists in the current global financial turmoil is that ‘such-and-such-country has massive foreign currency reserves’ with which to protect itself from a bigger crisis. Among emerging markets, China, Russia, India, Taiwan, South Korea and Brazil are often cited as examples. However, this ignores a crucial point, namely that these reserves… [Read more]