Fx weekly 21 jan 2016

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FX Weekly

Group Economics Macro & Financial Markets Research

21 January 2016

Oil rout impacts FX Georgette Boele Co-ordinator FX & Precious Metals Strategy Tel: +31 20 629 7789

 Oil rout triggers deterioration in risk sentiment year to date…  …and strongly supports the yen  Pegs under pressure

georgette.boele@nl.abnamro.com

Oil rout triggers deterioration in risk sentiment… Since the start of this year, oil prices have dropped by close to 25%. This has not only resulted in a sharp sell-off in currencies of oil exporting countries (or their pegs coming under pressure such as Saudi Arabia and Nigeria) but also in a general deterioration in sentiment in financial markets. Both developments have weighed heavily on currencies of commodity exporters and currencies that are sensitive to global growth. The Russian ruble has been the weakest currency dropping by more than 12% ytd to a new all-time low. The ruble was followed by the Mexican peso, South African rand and Colombian peso. Also, major currencies of commodity exporting countries such as the New Zealand dollar, the Australian dollar and the Canadian dollar have been under heavy pressure; losing between 4.5-6.0% versus the US dollar. Our energy analyst believes that oil prices should gradually recover in the coming weeks. See for more details our latest Energy Monitor. This should alleviate the pressure on currencies of oil exporting countries and improve investor sentiment.

EM FX performance ytd In %, with USD as basis

5

0 -5 -10

RUB

ZAR

PLN

MXN

TRY

BRL

KRW

INR

CLP

TWD

SGD

IDR

CNY

THB

CZK

HUF

-15

Source: Bloomberg

Insights.abnamro.nl/en


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Fx weekly 21 jan 2016 by ABN AMRO - Issuu