BMI has long-warned that expectations of Chinese yuan (CNY) appreciation are not fundamentally sound, and back in October, my colleagues and I anticipated that the yuan would be re-pegged to the US dollar as the Chinese economy slowed. We now increasingly recognise that a devaluation in the CNY/US$ spot rate could happen in 2012, or… [Read more]
In a move that was widely anticipated by the markets, Venezuela officially devalued its currency on January 1 2011, unifying the ‘essential goods’ rate of VEF2.6000/US$ with the ‘non-essential’ VEF4.3000/US$ rate. While the increased supply of dollars in the economy will make it easier to maintain the fixed exchange rate system over the medium term,… [Read more]
The US Federal Reserve has declared war on deflation by announcing QE 2.0, taking the ongoing competitive debasement among major central banks to the next level. Not only has this seen the US dollar weaken sharply against FX majors, such as the euro, Japanese yen and the Swiss franc, but perhaps even more notably, the… [Read more]
On this week’s Business Monitor Podcast, Head of Country Risk & Financial Markets Justin Patrie, Chief Economist Tim Cooper and Head of Asia Analysis Stuart Allsop discuss the global strategic outlook. The market sell-off catalysed by the German ban on naked short selling has reinforced BMI’s core views including deflation over inflation, a slowdown in… [Read more]
There is no question that China’s economy is booming, with growth spiking to 11.9% in the first quarter. The world’s largest country (by population) appears to have swept off the global recession with aplomb and many an analyst are counting on Chinese demand to drive a new global growth cycle. But is this growth sustainable… [Read more]
Risk Watchdog’s long-held view that the bolivar would sooner or later have to be devalued has finally materialised, with President Hugo Chávez on January 8 announcing the introduction of a dual exchange rate system. Bolivars will now officially be exchanged for dollars at two rates, VEF2.6000/US$ and VEF4.3000/US$, as opposed to the VEF2.1500/US$ peg that… [Read more]
The devaluation of the Vietnamese dong by 5% on November 25 comes as little surprise for anyone having observed Hanoi’s woes in trying to combine a fixed exchange-rate regime with strongly pro-growth fiscal and monetary policy in recent years. Previous devaluations (in December 2008 and March 2009 most recently) have done little more than to… [Read more]
