News24
18 Jan 2021, 00:42 GMT+10
A stronger U.S. dollar is proving to be an early test for emerging-market currencies on the eve of Joe Biden's inauguration.
The greenback gained over the last two weeks, buoyed by the president-elect's proposal for a $1.9 trillion stimulus package. Most developing-nation currencies have slumped in that span, and history suggests further pain may be in store.
MSCI Inc.'s gauge of emerging-market currencies ended 2020 with its biggest quarterly advance in a decade as optimism over the distribution of Covid-19 vaccines bolstered risk appetite. Now, the backdrop of rising cases, renewed lockdowns and vaccine concerns threatens to reverse those flows.
"If vaccines prove less effective than we expect and [the] global economy stumbles, the 'safe haven' dollar would likely appreciate," Goldman Sachs Group Inc. strategists including Zach Pandl wrote in a report.
Still, the strategists "expect broad dollar weakness" this year as exposures to risk assets and upside in commodity prices can outweigh the potential drag from higher U.S. rates.
One currency of interest to investors is the Turkish lira, which has climbed since hitting a record low in November. On Thursday, the central bank is expected to keep the nation's one-week repo rate at 17%.
"The lira has rallied and reserves are stabilizing, providing no reason to raise rates further," according to Bloomberg Economics. "Still, inflation accelerated in December, limiting the scope for rate cuts."
Policy makers in Malaysia, South Africa and Brazil will also decide on their borrowing costs this week.
Meantime, Biden's return to the White House on Wednesday will carry particular significance for traders who follow relations between the world's two largest economies. On Friday, the Trump administration announced it would sanction six officials from China and Hong Kong in a parting shot to Beijing.
Central banks decide
Turkey's central bank will probably leave its benchmark rate unchanged, according to the median estimate of 21 economists surveyed by Bloomberg
South Africa's central bank will probably leave its policy rate on hold at 3.5% on Thursday, according to 15 out of 16 economists in a Bloomberg survey
More data
Get a daily dose of Caribbean Herald news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Caribbean Herald.
More InformationNEW YORK, New York - U.S. stocks fell sharply Thursday, spurred on by rising bond yields. "There is a fork ...
WASHINGTON D.C.: The U.S. securities regulator, the Securities and Exchange Commission (SEC), has suspended trading in the securities of 15 ...
A California federal judge has issued the final approval of a $650 million Facebook class action privacy settlement, handing down ...
DUBLIN, Ireland: Ireland's manufacturing sector grew slightly for the second consecutive month in February, after a major decline at the ...
SYDNEY, NSW, Australia - Most of the major indices in Asia tumbled more than two percent on Thursday.The only bourse ...
SAN FRANCISCO, California: Airbnb hosts can see average earnings of up to $10,000 per year, Brian Chesky, CEO of Airbnb, ...
The build-up to the June polls in Mexico has been marred by the murders of at least 64 politicians.Security Minister ...
Dirco Minister Naledi Pandor is disgusted by the "whinging and whining" about the Cuban medical brigade.She said Cabinet decided to ...
The OPEC group of oil producers and its allies meet Thursday with all eyes on whether powerhouses Russia and Saudi ...
New Delhi [India], March 4 (ANI): As India supplied coronavirus vaccines to Barbados, Prime Minister Narendra Modi on Thursday said ...
Doha [Qatar], March 4 (ANI): Indian paddler Achanta Sharath Kamal suffered a 6-11, 4-11, 8-11 defeat against World No. 7 ...
New Delhi [India], March 4 (ANI/PRNewswire): Coalition for Disaster Resilient Infrastructure (CDRI) in partnership with member countries, organizations and institutions ...