Other emerging countries may be printing money to stimulate their economies and weaken their currencies, but Turkey is a winner right now for refusing to race to let its exchange rate race to the bottom.
A combination of policy moves and a slowing economy have weakened the Brazilian real by 4.8% since the beginning of March, making it the worst performing currency tracked by Bloomberg. For exporters, this is a welcome change from the 8.7% appreciation in the first two months of the year, consequently making it the best-performing currency.
An overly strong local currency has been a structural problem for Brazil — except, of course, when the real has been too weak for the government’s comfort. It looks like the situation is getting ready to reverse again.
About 40% of China’s gross domestic product comes from exports to the United States and Europe. Keeping those exports going is one of the reasons why the Chinese buy so much American and European debt.
Headlines around today’s announcement that Brazil is extending its 6% tax on foreign purchases of local bonds may look bearish, but the real news is not so bad.
Wholesale prices in India rose a relatively sedate 7.48% on an annualized basis in November, giving the central bankers in Delhi a chance to pause as they tighten interest rates.
In an unexpected move, central bankers in Bangkok have reversed course and now say inflation is a worse threat than a strong local currency, and have raised interest rates to fight it.