Monetary data out of China released over the past week have bolstered investor sentiment. Chinese CPI (consumer price index) continued to fall in December 2011, coming in at a 15-month low of 4.1% y-o-y (compared with the 6.5% high registered in June), while producer price inflation was subdued at just 1.7%. Such disinflation raises hope… [Read more]
Our focus this week is on the Indian monsoon, which remains a significant and unpredictable factor in determining the country’s agricultural performance, as well as that of headline inflation and economic growth. We only have to look back to the miserable monsoon of 2009, which triggered the worst drought in almost 40 years, to see… [Read more]
Much has been made over the potential impact of recent events in Japan on international rice markets. Given the importance of rice as a staple in Asia and increasing concern over food price inflation in emerging markets, this is of particular relevance. Japan, normally self-sufficient in rice, has seen swathes of coastal farmland devastated by… [Read more]
I am pencilling in a correction in Crude Palm Oil (CPO) prices over the coming months, before a resumption of the long-term uptrend. The spectacular rally in CPO prices since mid-2010 has been underpinned by several dynamics. First and foremost, the rally in grain prices since the middle of last year has driven gains. Given… [Read more]
Inflationary pressures are of rising concern across both emerging (EM) and developed (DM) markets and are set to remain a key theme in 2011. While a robust economic recovery (in EM) and loose monetary policy (across the board) have been the primary drivers of this phenomenon, rising commodity prices have also played an important role… [Read more]
2011 is brewing up to be a big year for political risk in emerging markets. Underlying much of the risk is food and energy prices, with rising inflation likely to catalyse public discontent, especially in countries with existing social strains. Nowhere is this more evident than in the Middle East, where the collapse of the… [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]
