Free Trial

Trending Oil Prices Supporting RUB, While Dovish CBRT Sends TRY To Record Low

EM FX
  • The firm trend in oil prices have been supporting the RUB in recent weeks; the ruble has been the best performing currency this year among the EM world, up 4.5% against the USD.
  • Not surprisingly, the TRY is the worst performing currency, down nearly 20% against the USD as the CBRT started to cut rates last month despite inflation standing close to 20%.
  • It is interesting to see that the ZAR is nearly unchanged against the USD this year despite the SARB remaining on hold, while some Latam currencies such as CLP (-13.6%) or PEN (8%) have experienced significant selling pressure even though central banks have been hiking aggressively.
  • Last week, we saw that Chile's central bank surprised the market by raising its benchmark rate by 125bps to 2.75% (vs. 100bps exp.), its highest level since May 2019.
  • High real yields and record current account surplus have been strong drivers of the ZAR, but the rand has also strongly benefited from the rise in global liquidity in the past year. The ZAR is also viewed as a 'risk on' currency that tends to perform well in periods of trending markets.
  • The CNY has also remained 'strong' this year against the USD (+1.5%) despite PBoC cutting rates and the sharp increase in inflation (PPI inflation surge to the highest level since November 1995).

Source: Bloomberg/MNI

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.