Currency

It’s time to take away Trump’s tariff toys

13 Aug 2018

Using steel duties to punish Turkey over a detained U.S. pastor is an abuse of the president's powers. While national security is a legitimate reason to restrict trade, doing so on a whim hurts America. Congress can be more muscular even if it's not yet prepared to rein Trump in.

Turkey fated to pick worst of its bad options

10 Aug 2018

The lira fell over 10 percent to record lows against the dollar. The country’s options are narrowing: impose capital controls or seek IMF help. The latter will come with strings that will be unpalatable to President Tayyip Erdogan. Defiant self-sufficiency is more his style.

Erdogan opens Turkish lira to new line of attack

6 Aug 2018

The currency hit a record low against the dollar after the United States said it was reviewing Turkey’s duty-free access to its markets. President Tayyip Erdogan has alienated investors. The tougher he talks to the world’s largest economy, the more they’ll punish Turkish assets.

China’s yuan squeeze sends a bearish signal

6 Aug 2018

The central bank has reinstated a rule that makes it more expensive to short the currency. By turning back to 2016-style measures, Beijing slowed the slide. It also telegraphed where the yuan is heading. That will encourage capital outflows and complicate efforts to boost growth.

Falling yuan alone won’t save China from tariffs

2 Aug 2018

The United States may raise tariffs on $200 bln of Chinese goods to 25 pct up from 10 pct. Sharp depreciation against the dollar will cushion the blow. But the complexity of Asian supply chains, along with collateral damage from a devalued currency, will ensure the impact stings.

India central bank doubles down on inflation fight

1 Aug 2018

The Reserve Bank of India raised rates by a quarter of a percentage point even though manufacturing activity slowed in July. The hike may hamper economic growth but removes doubts about policymakers’ commitment to a relatively new inflation mandate. The trade-off is worthwhile.

Turkey misses easy chance to win credibility

24 Jul 2018

The lira slumped after the central bank left interest rates unchanged. With inflation at 14-year highs, there was every reason to tighten policy. Inaction will only reinforce investors’ concern that President Tayyip Erdogan’s distaste for higher rates is exerting undue influence.

China’s fiscal nudge betrays growth jitters

24 Jul 2018

The government is adding some $10 bln of corporate tax cuts as part of a broader policy push. It follows tussles between the central bank and the finance ministry over how to support an economy that just expanded 6.7 pct. Speed is as much a priority as rebalancing growth.

China’s commitment to stable yuan looks unstable

19 Jul 2018

The currency has moved below 6.7 a dollar, a level recently defended by state banks. The fall reflects a greenback rally and cooling Chinese growth, not the trade war weapon many investors fear. As Beijing warms to monetary easing, though, lines in forex sand easily blow away.

Viewsroom: Trump’s Supreme Court pick

12 Jul 2018

The U.S. president has chosen a friend of big business in Brett Kavanaugh. But he faces bigger questions from Senate democrats about executive power. Plus: Commodity giant Glencore faces mounting risks in Washington, and what’s behind the Chinese yuan’s downward slide.

Tayyip Erdogan erodes Turkey’s market defences

10 Jul 2018

The president named his son-in-law as the finance minister in a new cabinet which excludes the man most trusted by investors. That’s a mistake. The self-styled “enemy of interest rates” now has no one to sugercoat policies and rhetoric that are apt to unsettle Turkish assets.

Boris Johnson exit makes UK pound more binary bet

9 Jul 2018

Sterling fell after the foreign secretary resigned. Prime Minister Theresa May may have a freer hand to negotiate a less economically damaging Brexit. Or she, the negotiations, and the economy could fall victim to political infighting. There’s little middle ground for the pound.

May’s Brexit plan faces battle on three fronts

9 Jul 2018

The resignation of two cabinet ministers emboldens hardliners who say PM Theresa May’s proposal to quit the EU is too soft. But opposition parties think it’s too hard, while Brussels will demand more concessions. That increases the chances Brexit will be chaotic – or be delayed.

China’s offshore debt crackdown adds outflow risk

9 Jul 2018

Officials are curbing dollar bond issuance as the yuan weakens. Regulation of the $775 bln market has always been haphazard. This move looks reactive and clumsy. It will put more downward pressure on a faltering currency, and could inadvertently encourage capital leakage.

Hadas: The euro is not doomed

4 Jul 2018

The single currency is a “EuroTragedy”, Ashoka Mody writes. The Princeton professor sees fatal historical, political and economic flaws. But this drama is not over yet. The euro may still be part of Europe’s historic destiny, if destructive nationalism can be restrained.

Chinese markets have much to fear from fear itself

4 Jul 2018

A stronger dollar largely accounts for a recent 6 pct fall in the yuan, with the central bank managing the pace. Tumbling Chinese stocks can be weathered, and some defaults are healthy. Patience is not one of President Xi’s virtues, though, and panicked intervention is a risk.

Bond markets start to call Saudi bluff on Bahrain

26 Jun 2018

The tiny Gulf kingdom’s bond yields are spiking. Bahrain’s borrowing and dependence on a high oil price make its debt hard to sustain. But Saudi Arabia has no interest in its neighbour devaluing or falling apart. The more markets push, the more likely Riyadh is to step in.

Turkey’s strongman gains mandate for bad policies

25 Jun 2018

Tayyip Erdogan and his AK Party emerged victorious from presidential and parliamentary elections. Enhanced powers may encourage the Turkish leader to implement inflationary stimulus and again challenge the central bank’s independence. Investors will be less forgiving than voters.

Argentina’s road to normality hits more zigzags

15 Jun 2018

The replacement of the central bank chief should help stabilize the peso, along with IMF assistance, despite Thursday’s 6 percent drop. It’s all part of President Macri’s long haul to turn his country’s economic pathology into more mainstream travails. It won’t be smooth going.

Emerging markets can mostly dodge Fed bullet

13 Jun 2018

U.S. central-bank tightening has a history of causing global turmoil, as in the 1980s Latin debt crisis. But developing countries can largely handle a rate hike, with flush reserves and reduced dollar-based debt. Troubles in Argentina and Turkey are essentially home-brewed.