![\"performance_of_emerging_currencies_against_the_us_dollar_since_30_june_2014.jpg\"](\"http:\/\/beta.next-finance.net\/wp-content\/uploads\/2014\/08\/performance_of_emerging_currencies_against_the_us_dollar_since_30_june_2014.jpg\")
<\/p>\nEmerging currencies were under pressure this summer. Save for the Indonesian rupiah, Thai baht, Malaysian ringgit
\nand Chinese yuan, emerging currencies has corrected against the US dollar since 30 June. It is mainly the CEEMEA
\ncurrencies and, to a lesser extent, Latin American currencies that have underperformed for several reasons, one
\nbeing the greenback\u2019s rebound in reaction to the Federal Reserve\u2019s intention to tighten monetary policy, the renewed
\npolitical strains over Ukraine and Gaza, concerns Argentina was heading for selective default, the steady decline in
\ncommodity prices and, finally, the deterioration in growth prospects for the global economy.<\/p>\n
<\/p>\n
Logically, the Russian ruble recorded the sharpest correction in reaction to the escalation of tensions in eastern Turning to Latin American currencies, the sharpest correction was recorded by the Chilean peso, which was Finally, Asian currencies remain solid despite the appreciation of both the US dollar and Chinese yuan. While the Thai
\nUkraine after western powers ratcheted up sanctions against Russia. However, other Eastern European countries
\n(Poland, Hungary and Romania) are also affected by this situation because of their trade exchanges with Russia and
\nof the sanctions imposed by Russia (embargo on agricultural products, etc.).<\/strong> One can expect economic growth in
\nCEEMEA countries to be affected by the sluggish European growth and strained relations with Russia, all of which
\nrisks penalising certain CEEMEA currencies, this against the backdrop of a steady decline by the ruble stemming from
\nthe fact this currency is overvalued.
\nFurthermore, CEEMEA economies face deflationary pressures, which prompted
\nHungary to slash monetary policy rates, while Poland is pondering the need for a further monetary easing given
\nconcerns over the vigour of the economic growth.<\/quote>
\n The Turkish lira is penalised by the situation in neighbouring Iraq
\nand by the repeated interest cuts when inflation shows no sign of subsiding contrary to the central banks\u2019
\nexpectations (annual inflation reached 9.38% in July).This is undermining the lira even though the country\u2019s stronger
\neconomic growth and smaller current account deficit have gone some way reassuring the market. In the short term,
\nhowever, the currency will remain under pressure due to political uncertainties over the new government following
\nRecep Tayyip Erdogan\u2019s victory in the presidential election. The USD\/TRY could move back towards 2.25 in the short
\nterm. The South African rand put up a stiffer resistance after the SARB decided on another interest rate hike in July,
\nalso because the Ukraine-Russia crisis is distant geographically.<\/p>\n![\"revision_of_2014_gdp_growth_forecasts_for_bloomberg_consensus_over_the_last_6_months.jpg\"](\"http:\/\/beta.next-finance.net\/wp-content\/uploads\/2014\/08\/revision_of_2014_gdp_growth_forecasts_for_bloomberg_consensus_over_the_last_6_months.jpg\")
<\/p>\n
\nconsistent with our trade idea of 3 July to play a recovery of the USD\/CLP towards 577 (+4.7%) after the interest
\nrate cut decided by the central bank in reaction to the country\u2019s weak economic growth.
\nIn our view the peso still has
\nsome downside in the short term, so that the USD\/CLP could go on to test 592.<\/quote>
\n The Brazilian real also weakened
\nafter the central bank decided to mark a pause in its monetary tightening. The market was also disappointed at the
\ncountry\u2019s growth prospects in the absence of structural reforms and with the outcome of the looming presidential election more uncertain than expected. The central bank has managed to limit the real\u2019s decline through market
\ninterventions, but the trend nonetheless remains bearish for the currency over the medium term despite the very
\nattractive interest rate levels. The Mexican peso has also been penalised by the weaker-than-expected growth,
\nprompting the central bank to ease its monetary policy. In the short term, the expected rebounded of the US dollar
\nat the end of the year means that that the USD\/MXN could head higher towards 13.30.<\/p>\n![\"revision_of_2014_current_account_balance_forecasts_for_bloomberg_consensus_over_the_last_6_months.jpg\"](\"http:\/\/beta.next-finance.net\/wp-content\/uploads\/2014\/08\/revision_of_2014_current_account_balance_forecasts_for_bloomberg_consensus_over_the_last_6_months.jpg\")
<\/p>\n
\nbaht rebounded after political tensions abated in the country, the Indonesian rupiah shows signs of recovering after
\nthe pro-business opposition party\u2019s victory in the recent elections. The Malaysian ringgit has been bolstered by the
\nstronger-than-expected economic growth, while the Indian rupee is on hold waiting for structural reforms, even
\nthough the current account deficit has improved sharply in 2014. Finally, the South Korean won has been slightly
\npenalised by the interest rate cut decided by the South Korean central bank in reaction to the slower growth and
\nweaker inflation.<\/p>\n
<\/a>\n\t\t\t<\/div><\/figure>