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26 Feb 2014
Flash: EM strength would be temporary - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, observed the current better momentum around the EM space to be temporary.
Key Quotes
"The recent economic slowdown in the US is also allowing emerging market currencies to rebound further in the near-term by helping to ease investor concerns over tightening external financing conditions resulting from Fed QE tapering. It will likely prove only temporary relief for emerging market currencies with poor economic fundamentals."
"However, the rebound for emerging market currencies such as the Indonesian rupiah alongside an improvement in economic fundamentals leaves them less vulnerable to any further sell off ahead. The rupiah has been supported by a narrowing in Indonesia’s current account deficit to 1.8% of GDP in Q4 2013 and higher real policy rates."
Key Quotes
"The recent economic slowdown in the US is also allowing emerging market currencies to rebound further in the near-term by helping to ease investor concerns over tightening external financing conditions resulting from Fed QE tapering. It will likely prove only temporary relief for emerging market currencies with poor economic fundamentals."
"However, the rebound for emerging market currencies such as the Indonesian rupiah alongside an improvement in economic fundamentals leaves them less vulnerable to any further sell off ahead. The rupiah has been supported by a narrowing in Indonesia’s current account deficit to 1.8% of GDP in Q4 2013 and higher real policy rates."