• On 22nd February, Finance minister Gordhan presented his annual budget to the national assembly.
• Gordhan faced a painful trade-off between managing South Africa’s eye-watering debt situation, supporting stagnant private consumption and political sustainability in the most unequal country in the world
• We simulate South Africa’s debt/GDP path under different assumptions, and argue that the economy still has a long way to go to achieve fiscal sustainability
• Strategies for earning sustainable return in currency are more nuanced than in equities or bonds due to the absence of a “long-only” beta
• We argue that there are, however, strategies to target sustainable returns in the currency space
• This blog post describes growth, carry, momentum and value as potential sources of return in currency
• 11th January saw data on Turkey’s November current account released
• The drop off in the trade balance can be largely explained by FX effects and continued decline in Tourism revenues
• A careful analysis suggests that in the detail might be some much-needed good news for Turkey
How to rank the relative attractiveness of Emerging Market currencies? In this blog post we bring together various metrics that should help investors decide on the perennial question, whether or not to hedge Emerging Market currency risk.
Since the US presidential election on November 9th, markets generally have welcomed the more conciliatory tone from the President-elect Donald Trump. How have currency markets reacted, how might the changing economic environment affect hedging decisions, and what does this mean for currency returns?