From the CEO OF EMIS

As someone who runs a business that derives much of its revenue from emerging markets, I am perhaps more interested than most in in trends and fluctuations in foreign exchange. 2015 saw a collapse in emerging market currencies worldwide as capital flowed out of those markets and commodity prices continued to tumble. But 2016 has seen something of a recovery as fears of a further US rate rise have receded and commodity prices slowly regain ground. JP Morgan have noted that emerging market currencies have recently experienced their best period of performance since 2013.

Whether this rally is sustainable is certainly open to question. There is still the threat of the Fed raising rates later this year and influential regional economies like Brazil and Russia are still in turmoil. As I write, the Turkish lira is on the slide due to political uncertainty. But even with these caveats, it is conceivable that we have passed the low point for emerging market currencies. For any business with exposure to currency fluctuations, a period of relative calm would certainly be welcome.

Best wishes,

Guy Dunn
Chief Executive Officer

Here are a few articles I came across on the EMIS service this week related to emerging markets FX:

THE TOP CONCERNS OF COLOMBIAN CEOS: PWC SURVEY

Exchange rate volatility and tax burdens were the two most significant concerns from top Colombian CEOs.

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RUPEE STRONGER AT REAL EFFECTIVE EXCHANGE RATES

Finance Minister Arun Jaitley informed the Indian Parliament that although the average annual exchange rate had fallen by over 6 per cent.

CHINA’S YUAN WEAKENS AFTER PEOPLE’S BANK OF CHINA CUTS THE CURRENCY’S FIX

One way China maintains its control over the currency is by allowing the yuan to rise or fall two percent on either side of the daily fix.

Moldova’s port, which sits on the bank of the Danube River, has enjoyed an increase over the last year in the number of containers passing through. Danube Logistics (general investor and operator) signed an investment agreement with the Moldovan government at the end of 2014.

RUSSIA BANKING: FROM RUSSIA WITH CAUTION

If the recovery of the Russian economy turns out to be slower than expected, then the loan quality of banks may deteriorate further and put pressure on the capital.

SUB-SAHARAN AFRICA: FOR ALL THE GOLD IN AFRICA

Sub-Saharan Africa is a net exporter of non-ferrous metals as they accounted for around 70% of the region’s exports of metals and metal products.

Oikos Mando Panjaitan of the Bank of Indonesia announced, “This January, Indonesia emerged as the number two among favourite investment destinations, after China.

The AT Kearney Foreign Direct Investment Confidence Index analyses how political, economic and regulatory changes will impact a country’s future FDI inflow.

To ensure a stable power supply to consumers, the coal ministry will be allocating five coal mines to state-owned power utilities.

Ecuador will privatise a number of assets and will use the receipts from their sale to cover part of damages caused by a recent deadly earthquake.

The International Monetary Fond (IMF) expects that Argentina’s gross domestic product (GDP) will shrink some 1.0% this year, International News reported.

The US island territory Puerto Rico is faced with a default as it authorities announced on Sunday that they are unable to repay $422 in debts due Monday.

Russia economy shrank 1.8% on the year in March and by 1.4% in the first quarter of this year, newswire Prime reported on Friday citing the Economic Development Ministry.

German carmaker has to pick a location for its new EUR 800 million engine plant and hesitates whether between Polish city of Jawor and Romanian Sebes.

The European Commission revised its forecast for Russia’s 2016 gross domestic product (GDP) decline for 2016 and worsened it to 1.9% from 1.2%.

According to David Scowsill, CEO of the World Travel & Tourism Council (WTTC), the travel and tourism sector in the Middle East generated US$ 194.5 bn in 2015.

Read more…

Saudi Arabia is going to ease tourist visa regulations in order to boost its local tourism. As part of Saudi Arabia’s Vision 2030, the plan is to issue a number of tourist visas per year.

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As of end-March 2016, Iran produced 15.3 mn mt of finished steel products, down 7% y-o-y. The crude steel output for the same period was 16.71 mn mt, down 0.58% y-o-y.

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