Entries filed under 'Emerging Markets'

    Is This a Window of Opportunity for Emerging-Market Currencies?

    May 22, 2015 10:40 AM by Leah G. Traub, Ph.D.

    The European Central Bank’s continuing commitment to quantitative easing eventually will boost the economies of emerging markets and support their currencies.

    With the European Central Bank’s (ECB) ongoing commitment to quantitative easing, we do not expect much more euro appreciation versus the U.S. dollar.  But a window of opportunity for emerging-market (EM) currencies versus the euro may be  on the horizon. And the recent support for EM currencies versus the U.S dollar remains in play, at least for the short term.

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    Market Sentiment Sinks the Ruble

    December 23, 2014 9:08 AM by Leah G. Traub, Ph.D.

    Market contagion, however, should be limited.

    When a country is facing a currency crisis, as clearly Russia is, an interest-rate hike alone, with no other measures, is a sign of desperation and a lack of understanding of the underlying situation. So it was not surprising when the market punished the ruble following a late-night decision on Monday, December 15, by the Russian central bank to hike a key interest rate by 650 basis points, to 17%. 

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    Weighing the Pluses and Minuses of a Commodities Downturn

    November 3, 2014 12:30 PM by Leah G. Traub, Ph.D.

    Sure, sharp drops in commodities prices have hurt major producing countries that have not been able to diversify their economies away from commodities, but heavy importers should benefit.   

    People forget that more than half of the emerging markets universe is comprised of commodity importers. These countries are not just exporters, which generally suffer when commodity prices drop, and the market will start to differentiate if the price declines continue. One prime example is India, which should benefit tremendously from lower commodity prices, as at least 50% of India’s total imports are commodities. So should Turkey, which hasn’t been able to implement any kind of structural reforms to control its current account deficit that is dominated by an oil imbalance. 

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    Time for Emerging Markets to Enter Decouple Counseling?

    October 31, 2014 10:40 AM by Leah G. Traub, Ph.D.

    While emerging markets have continued to outpace developed markets, the differences in economic policies have been dramatic

    Looking back at the third quarter, investors were struck by how much the policies of developed and emerging markets have diverged from one country to another. While the U.S. Federal Reserve and the Bank of England are generally expected to hike interest rates in the next six to nine months, the European Central Bank (ECB) is cutting interest rates and beginning a quantitative-easing program of its own. The Bank of Japan, meanwhile, may have to enlarge its quantitative-easing program.

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    Investing in Russia with "Putin Risk"

    October 29, 2014 11:25 AM by Leah G. Traub, Ph.D.

    While the ruble has been battered for months by risk aversion toward Russian assets caused by the conflict in Ukraine, yields on some government bonds remain attractive.  

    When it comes to managing Lord Abbett’s emerging markets currency and emerging markets local bond funds, while supporting the firm’s currency-hedging strategies, political risk often goes with the territory, especially in Russia, where markets have gyrated wildly this year.

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