FX Update : EM crushed again

It started this morning with the Japan trade deficit.

But look at the way 2 reports put it.

“The trade data released by the Japanese custom office was worse than the market median expectation. The trade deficit increased to JPY1,024bn in July before the seasonal adjustment, larger than economists’ forecast at JPY 773bn. After the adjustment, the deficit was JPY 944bn, increasing from JPY 598bn in the previous month.” Source : Citi

Aug. 19 (Bloomberg) — Japan’s exports jumped by the most
since 2010 in July, aiding Prime Minister Shinzo Abe’s efforts
to drive an economic recovery even as rising energy costs
boosted the trade deficit.
Exports increased 12.2 percent from a year earlier after a
7.4 percent rise in June, the Ministry of Finance said in Tokyo
today. Imports climbed 19.6 percent, leaving a trade deficit of
1.02 trillion yen ($10.5 billion), the third biggest on record
in data back to 1979. The seasonally-adjusted deficit widened
from June to 944 billion yen.

Since there was no cause for excessive cheer, it’s EM crunch time again.

INR  -1%
IDR -0.96%
MXN -0.42%
SGD -0.36%
THB -0.26%
MYR -0.23%
KRW -0.16%
PHP -0.14%

Thailand’s economy expands 2.8%, slower than economists’ 3.3% estimate.


  • Bank Indonesia’s new reserve requirement may slow lending, banks getting smack. Bank Rakyat Indonesia -6.4%, Telekomunikasi Indonesia -4.9%
  • Stocks fall on news about widening current account deficit, John Rachmat, head of equities research at Mandiri Sekuritas, said by phone today. Rupiah should be allowed to depreciate to appropriate level, which would allow foreign investors to return: Rachmat
    Indonesia’s 2Q current account deficit widened to $9.85b, or 4.4% of GDP, from $5.82b in 1Q, according to statement posted on Bank Indonesia’s website on Aug. 16
  • Foreign institutional investors sold net $85.4m of Indonesian stocks on Friday, Aug. 16, highest outflow since July 8: exchange data


Lost of faith
“The market is questioning the effectiveness of policy
makers’ moves and the options available to them,” said Priyanka
Kishore, a strategist at Standard Chartered Plc in London.
“Earlier, the government said it had a grand plan. This is what
the market expected, but the final measures disappointed.” Source : Bloomberg


Aug. 19 (Bloomberg) — SGD/IDR touches 8,262.27, highest
since Nov. 2008.

Aug. 19 (Bloomberg) — Yield gains to 2.61% as of 11:52am
in Singapore from 2.48% on Aug. 16, according to data compiled
by Bloomberg and Monetary Authority of Singapore.
• That would be highest close since July 8

Call it any reason you want. It is just fear.


Related Articles :
Macro Outlook & Flows : Fear Overtakes Greed (tradehaven.net)