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
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