Emerging markets remain under pressure – Emerging markets already lost their luster a few years ago thanks to some country-specific problems but also for broader reasons. Gone are the days of turbocharged growth and surpluses, while external debt is again on the rise. These problems are set to plague EM currencies for some time to come. Our thoughts on that.
The power and impotence of Mario Draghi – As his term winds down, Mario Draghi has again shown how great the influence of the president of the European Central Bank is. At the same time, the plight of Italy also shows how little monetary policy influences growth. Next month Christine Lagarde takes over as ECB president. She faces a mixed and challenging economic picture. Our assessment of the influence of the new ECB president.
SEK and NOK face unfavorable trade winds – The currencies of Sweden and Norway are undervalued by around 20 percent against the US dollar. This is partly because of flagging demand for their exports. Their currencies are therefore doing what they should be doing, namely reflecting the international dollar prices for their exports and acting as shock absorbers. Our observation on the development of the two currencies.
The USD declined further in May as vaccination and recovery momentum increased in other economies...» more