Thursday, September 12, 2013

The Rupee & Rupiah Plummet – Just A Taste Of What’s To Come?

 11 SEPTEMBER 2013
The Rupee & Rupiah Plummet – Just A Taste Of What’s To Come?
By Andre Lee

Over the past few years, emerging markets have seen huge capital inflows on the back of excess liquidity in developed markets.  The era of ‘cheap money’ was precipitated by unprecedented quantitative easing programs in the United States.

However, emerging markets have witnessed their currencies take a beating ever since Ben Bernanke said on May 22 that the Federal Reserve might begin to taper its US$85 billion monthly bond purchases if the economy picks up.  Investors have begun to relocate capital to safer havens as the yields offered by emerging markets become less attractive in an environment with higher interest rates.


The infographics below depict the plight of two of the worst performing Asian currencies in the year to date-the rupiah and the rupee.  Read on to get a grasp of the problems in these two economies and what their governments have done so far to stabilise their currencies.

We next take a look at the rupiah, which is South East Asia’s worst performing currency of 2013.
We have about more than a week to go before the Federal Open Market Committee meeting where US policymakers will decide whether or not to taper the stimulus program. It will be interesting to find out if the effect of tapering has been fully priced in by currency markets, or if there will be more carnage to come should the Fed really taper. Your guess is as good as mine.

One cannot help but to draw parallels between the current situation that emerging market currencies are facing and the Asian Financial Crisis (AFC) in 1997. Back then in 1997, many developing countries in Asia such as Thailand and South Korea ran high interest rates and were attracting huge capital inflows and experienced a run-up in asset prices. Their large current account deficits were funded by hot money. Once Alan Greenspan raised interest rates to counter inflation in the US, capital began flowing back to the US and many Asian currencies fell drastically.

The above mechanism sounds similar to what we are facing now, doesn’t it? It is perhaps unlikely that we will ever face something of the same magnitude as the AFC. Policymakers have learnt (we all hope so) from past lessons and put in place stricter controls on current account deficits and have more flexibility in controlling their currencies. In the meantime, the governments of emerging markets have to get their act together and arrive at the most prudent policies to tackle the immediate problems that they are facing.

Source/Extract/Excerpts/来源/转贴/摘录: http://www.sharesinv.com/
Publish date: 11/09/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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