Published Nov 11, 2018 03:01PM ET
Updated Nov 11, 2018 05:30PM ET
Falling Oil Prices Are Becoming an Emerging-Markets Catalyst
(Bloomberg) -- Falling oil prices are fast becoming a catalyst for emerging markets.
Last week’s slide in crude was partly behind the weakness in the Russian ruble, Mexican peso and Malaysian ringgit, according to Societe Generale (PA:SOGN) SA. With oil wallowing in a bear market, OPEC and its allies gathered in Abu Dhabi on Sunday to weigh production cuts.
“Oil-importing emerging economies’ currencies would likely react negatively to a cut in OPEC output given Iranian oil exports are already likely to wane over time under the impact of U.S. sanctions,” said Mansoor Mohi-uddin, the Singapore-based head of foreign-exchange strategy at NatWest Markets. “In contrast, if oil prices fall it will benefit the currencies of major oil-importing emerging markets including the Indian rupee and Turkish lira.”
The outlook for oil, a key source of revenue for Russia and Saudi Arabia, is adding a fresh twist for a market already obsessed with Federal Reserve tightening and the U.S.-China trade dispute. The prospect of any breakthrough on trade took a knock Friday when White House trade adviser Peter Navarro warned Wall Street not to pressure President Donald Trump into a quick deal.
Read more: U.S.-China Talks Highlight Deep Divide Before Trump-Xi Meeting
On the domestic front, there’s a chance Mexico’s central bank will increase interest rates Thursday after the peso clocked up its sixth weekly loss. Policy makers in Thailand, Indonesia and the Philippines will likely leave their benchmark rates unchanged, thanks to gains in the rupiah and the peso, according to ING Groep (AS:INGA) NV.
The ruble led a retreat in emerging-market currencies last week after the Fed signaled it will keep raising rates, making Wednesday’s release of U.S. consumer-price data the next pointer for monetary policy.
Read More: Financial Conditions to Fuel EM Factor Returns in 2019
Oil Matters
Mexican Move
Asia on Hold
Brazil’s Central Bank Chief
Lebanon’s Deadlock
Nigeria’s Bond Roadshow
Upcoming data:
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.