What has changed in EM - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers, shares his views on the emerging markets, with key quotes found below:

"India cut taxes on gasoline and diesel to help slow inflation.  The Finance Ministry said the basic excise duty on gasoline and diesel will be cut by 2 rupees per liter.  It added that the government will lose about INR130 bln in revenues for the current FY2017/18 ending March 31 because of the cut."

"Bank Indonesia signaled that the easing cycle is nearing an end.  It said its sees little room for further rate cuts, but added that it can take other measures to stimulate the economy.  Assistant Governor Waluyo said “It depends again on the data even though until last week we see the situation up until the end of this year or probably next year, the room for cutting the policy rate is not much.”  

"Hungarian Socialist candidate Laszlo Botka quit the race after failing to unite the opposition.  The opposition remains in disarray six months ahead of elections.  Polls show support for the Socialists dropping to less than 10%.  With such poor polling numbers, Botka was unable to gain the backing of the other opposition parties.  Several of these parties recently announced plans to run their own candidates for prime minister."  

"Romania’s central bank started a tightening cycle.  While the bank left the base rate unchanged at 1.7%, it narrowed the interest rate corridor around that rate to 1.25 percentage points from 1.5 previously.  Governor Isarescu said another adjustment to the corridor may come at the next meeting on November 7, adding “The period with very low-interest rates is over, and not only in Romania.”  

"Mexico’s government will likely adjust its 2018 budget for 2018 due to the impact of the earthquakes last month.  Finance Minister Meade said that even though the government had presented its 2018 budget in early September, "the context had changed."  No details on what the adjustments will be, but we think this is a sensible move in light of the need for infrastructure and reconstruction spending stemming from the earthquakes."