Sell Emerging-Market Currencies on Rally
페이지 정보
U2관련링크
본문
Sell Emerging-Market Currencies on Rally, Morgan Stanley Says
By Patricia Lui
Oct. 31 (Bloomberg) -- The recovery in emerging-market currencies is
temporary and investors should sell on rallies and hedge against further
weakness, according to Stephen Jen, Morgan Stanley's global head of
currency research.
Interest-rate reductions by central banks around the world, liquidity
injections and currency swap facilities may not be enough to ward off a
global recession, Jen said in a research note yesterday. Seven of the 10
most-active Asian currencies outside Japan strengthened against the
dollar this week, with South Korea's won leading the rally with an 11.3
percent gain. The MSCI Asia-Pacific Index of stocks rose 7.5 percent,
erasing almost all of last week's losses.
``We remain very worried about emerging-market currencies,'' Jen wrote
in his report. ``Global fundamentals will continue to overwhelm country
fundamentals and will be most emerging-market unfriendly as the world
falls into a deep recession.''
Dollar shortage among local corporations, falling capital inflows into
emerging countries and investors' ``re-examining'' the prospects of
economic growth will push the currencies weaker, he said.
In the past month, Iceland, Hungary, Belarus, Pakistan and Ukraine have
approached the International Monetary Fund for financial assistance. The
U.S. Federal Reserve also announced up to $120 billion in currency swap
facilities for Mexico, Singapore, South Korea and Brazil this week to
ensure sufficient dollar liquidity. Central banks in the U.S., China, Hong
Kong and Taiwan lowered benchmark interest rates this week.
`Marginal Support'
``The IMF's latest facility and the Fed swap lines will provide marginal
support for selected emerging-market currencies but will not be enough to
fully offset the powerful forces of a global recession pushing emerging
currencies lower from here,'' Jen said.
Most of the countries have large foreign-exchange reserves and the IMF
program and the Fed's swap lines are not ``game changers,'' he said.
``The irony is that most of the countries targeted already have very large''
reserves, Jen wrote. ``The question is why they haven't been able or
willing to resist currency weakness with so much reserves.''
IMF programs also rarely signal a turning point in currencies, the note
said.
During the 1997-98 Asian financial crisis, South Korea, Thailand, Indonesia
and the Philippines sought IMF help as speculators bet against their
currencies, triggering an exodus of funds that almost wiped out their
foreign-exchange reserves.
Jen didn't provide forecasts for currencies.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net
Last Updated: October 30, 2008 23:17 EDT
By Patricia Lui
Oct. 31 (Bloomberg) -- The recovery in emerging-market currencies is
temporary and investors should sell on rallies and hedge against further
weakness, according to Stephen Jen, Morgan Stanley's global head of
currency research.
Interest-rate reductions by central banks around the world, liquidity
injections and currency swap facilities may not be enough to ward off a
global recession, Jen said in a research note yesterday. Seven of the 10
most-active Asian currencies outside Japan strengthened against the
dollar this week, with South Korea's won leading the rally with an 11.3
percent gain. The MSCI Asia-Pacific Index of stocks rose 7.5 percent,
erasing almost all of last week's losses.
``We remain very worried about emerging-market currencies,'' Jen wrote
in his report. ``Global fundamentals will continue to overwhelm country
fundamentals and will be most emerging-market unfriendly as the world
falls into a deep recession.''
Dollar shortage among local corporations, falling capital inflows into
emerging countries and investors' ``re-examining'' the prospects of
economic growth will push the currencies weaker, he said.
In the past month, Iceland, Hungary, Belarus, Pakistan and Ukraine have
approached the International Monetary Fund for financial assistance. The
U.S. Federal Reserve also announced up to $120 billion in currency swap
facilities for Mexico, Singapore, South Korea and Brazil this week to
ensure sufficient dollar liquidity. Central banks in the U.S., China, Hong
Kong and Taiwan lowered benchmark interest rates this week.
`Marginal Support'
``The IMF's latest facility and the Fed swap lines will provide marginal
support for selected emerging-market currencies but will not be enough to
fully offset the powerful forces of a global recession pushing emerging
currencies lower from here,'' Jen said.
Most of the countries have large foreign-exchange reserves and the IMF
program and the Fed's swap lines are not ``game changers,'' he said.
``The irony is that most of the countries targeted already have very large''
reserves, Jen wrote. ``The question is why they haven't been able or
willing to resist currency weakness with so much reserves.''
IMF programs also rarely signal a turning point in currencies, the note
said.
During the 1997-98 Asian financial crisis, South Korea, Thailand, Indonesia
and the Philippines sought IMF help as speculators bet against their
currencies, triggering an exodus of funds that almost wiped out their
foreign-exchange reserves.
Jen didn't provide forecasts for currencies.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net
Last Updated: October 30, 2008 23:17 EDT
작성일2008-11-01 21:57
등록된 댓글이 없습니다.
