Group Economics
EM FX Weekly
Macro & Financial Markets Research Georgette Boele, Peter de Bruin,
CEEMA FX in action
Arjen van Dijkhuizen +31 20 629 7789
11 June 2015
Political uncertainty sends the Turkish lira lower Russian ruble recovered on rise in oil prices and scaling back of CBR foreign currency purchases Chinese economic data bring signs of stabilisation
The Turkish lira drops on election outcome
supported the ruble. Indeed, since the 5th of June, the CBR
The Turkish lira was the weakest emerging market currency
has significantly scaled back its FX reserve interventions.
this week following the surprising election result. During
Containing any ruble weakness would also help the CBR to cut
Monday morning trade the lira dropped by more than 5%
its key rate by another 100bp during its meeting on the 15th of
versus the US dollar. Afterwards it recovered. However, it is
June. This week the ruble recovered by almost 3% despite the
still down more than 3% so far this week.
prospect that sanctions will be extended.
Turkish lira out of favour after the elections
China’s May data show signs of stabilisation …
With USD as basis, in %
After weak April data indicated that China’s economy started
TRY
INR
IDR
better than in April. The Chinese yuan moved sideways for the
CNY
on Thursday also gave mixed signals, but overall were a touch
-4
TWD
ongoing weakness. The high frequency activity data published
-3
KRW
trade data, headline inflation and fixed investment point to
-2
THB
-1
SGD
show a picture of stabilisation or even improvement, while
CLP
0
BRL
PMIs, housing sales, industrial production and retail sales
HUF
1
ZAR
measures. Still, the latest data present a rather mixed bag.
PLN
economy is stabilising, benefiting from previous easing
2
MXN
3
CZK
Q2 on a weak note, May data showed more signs the
RUB
4
week. Stimulus will keep annual growth close to 7% target
Source: Bloomberg
We expect some improvement in growth momentum in the Turkey’s AKP fails to secure a majority,…
coming months, as the authorities remain committed to add
The elections on the 7 of June unexpectedly showed that the
measured monetary and fiscal stimulus and on the expectation
Turkish AKP lost its majority in parliament. It secured just 41%
of strengthening external demand from advanced economies.
of the vote, down from 50% in the 2011 elections. The loss of
We have left our growth forecast for 2015 unchanged at 7%, in
the AKP suggests that the Turkish electorate disagrees with
line with the official target.
th
President Erdogan’s increasingly authoritarian ambitions, and the nationalistic tone of the AKP. Consequently, Turkey is now faced with the first hung parliament since 2002. The resulting coalition talks will be challenging, to say the least, and must be completed within 45 days, according to Turkish law. If the new parliament fails to form a government within this time period, President Erdogan will need to call snap elections. The resulting uncertainty weighed heavily on Turkish assets and the lira. The Russian ruble recovered on higher oil prices The rise in oil prices had a delayed positive spillover effect to Russian ruble. In addition, the fact that the Central Bank of Russia (CBR) scaled back foreign currency purchases also
ABN AMRO emerging market currency forecasts USD/CNH USD/INR USD/KRW USD/SGD USD/THB USD/TWD USD/IDR USD/RUB USD/TRY USD/ZAR EUR/PLN EUR/CZK EUR/HUF USD/BRL USD/MXN USD/CLP
11-Jun 6.21 64 1,109 1.35 33.74 30.93 13,322 55 2.75 12.43 4.14 27.50 313 3.12 15.53 631
Q2 2015 6.22 64 1,100 1.34 33.50 30.80 13,200 53 2.65 12.00 3.95 27.50 310 3.05 15.25 630
Q3 2015 6.26 65 1,130 1.37 33.80 31.30 13,500 52 2.85 12.20 3.95 27.50 315 3.25 15.50 630
Q4 2015 6.30 65 1,130 1.40 34.00 31.50 13,700 50 2.85 12.20 3.90 27.50 320 3.20 15.50 630
Source: ABN AMRO Group Economics
Q1 2016 6.35 65 1,140 1.42 34.50 31.80 13,800 48 2.85 12.20 3.85 27.40 320 3.20 15.25 635
Q2 2016 6.37 66 1,150 1.43 34.80 32.00 13,900 47 2.85 12.20 3.85 27.25 325 3.10 15.25 640
Q3 2016 6.38 66 1,150 1.44 34.80 32.20 14,000 46 2.85 12.20 3.85 27.00 325 3.10 15.00 645
Q4 2016 6.40 66 1,150 1.45 34.80 32.50 14,100 45 2.85 12.20 3.85 26.75 330 3.10 15.00 650
2
EM FX Weekly - CEEMA FX X in action
out Group Eco onomics at:http ps://insights.ab bnamro.nl/en// Find out more abo This document has been prrepared by ABN AMRO O. It is solely intended to provide financial annd general information on economics. The infformation in this docum ment is strictly proprieta ary and is being supplie ed to you solely s for your informattion. It may not (in who ole or in part) be reprod duced, distributed or paassed to a third party or o used for any other purposes than stated abbove. This document is s informative in nature and does s not constitute an offerr of securities to the pu ublic, nor a solicitation to make such an offer. r. eliance may be placed d for any purposes wha atsoever on the informa ation, opinions, forecassts and assumptions co ontained in the docume ent or on its completenness, accuracy or fairness. No representation n or No re warra anty, express or implie ed, is given by or on be ehalf of ABN AMRO, orr any of its directors, offficers, agents, affiliate es, group companies, or o employees as to the accuracy or completeness of the information n conta ained in this documentt and no liability is acce epted for any loss, aris sing, directly or indirectltly, from any use of suc ch information. The views and opinions expreessed herein may be subject s to change at an ny given n time and ABN AMRO O is under no obligation n to update the informa ation contained in this ddocument after the datte thereof. oduct of ABN AMRO Ba ank N.V., you should obtain o information on vaarious financial and oth her risks and any poss sible restrictions that yoou and your investmen nts activities may encou unter Before investing in any pro unde er applicable laws and regulations. If, after reading this document, you y consider investing in a product, you are advised a to discuss such an investment with yyour relationship manager or personal adviso or and chec ck whether the relevantt product 窶田onsidering the risks involved- is appropriate a within yourr investment activities. The value of your inve estments may fluctuatee. Past performance is no guarantee for future e returrns. ABN AMRO reservves the right to make amendments a to this ma aterial. opyright 2015 ABN AM MRO Bank N.V. and affi filiated companies ("AB BN AMRO"). ﾂｩ Co