EM FX unease back on the radar – Danske Bank

Senior Analyst at Danske Jens Pedersen gives his views on the recent developments in the EM FX universe.

Key Quotes

“Yesterday, the central bank in Argentina raised its benchmark policy rate from 45% to 60% in a forceful attempt to shore up confidence, see Flash Comment Argentina: Peso collapse, emergency central bank hike - what now IMF? Despite the hike, the Peso continued to weaken. We expect the IMF will be forced to provide additional support, which the IMF managing director also alluded to two days ago. Together with yesterday’s central bank action, this will ultimately aid the ARS”.

“The troubles in Argentina spilled over to other vulnerable emerging markets, led by Turkey, where rumours about the resignation of the deputy central bank governor added to market anxiety. In the current negative market environment, we see further pressure on the TRY as likely as the central bank is sidelined now”.