Category Archives: Poland

Chart Of The Day: Emerging Markets Currency Wars Landscape

This is interesting:

2013.03.06.Swan FX Diagram

2013.03.06.Swan FX Table

And here’s an explanation of what we’re looking at:

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Rapid Growth Markets: Behold THE FUTURE

I’ve just spent way too much time playing with Ernst & Young’s interactive spider graph thingy that allows you to compare their 25 “rapid-growth” markets across a range of macroeconomic indicators. According to E&Y, these 25 countries possess the most promising “long-term potential to generate strong business opportunities.”

So since a picture is worth a thousand words, here’s how all 25 of these economies will change from 2011 to 2016 from the meta-macro view, compared against each other:

Okay! Is everybody ready to go out and make some money?
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Poland’s conundrum: hard currency loans, carry trade, inflation, Eurozone crisis

Certain email conversations I’m having lately (which appears to be the preferred mode of communication so far for Diverging Markets readers) lead me to believe that the perils of hard currency debt for developing countries are either not fully understood, viewed as someone else’s problem, or both. At the risk of coming off as though “I told you so”, Reuters has two brief blurbs today concerning the situation in Poland that spell out what I’ve been trying to explain to developing country borrowers for at least half a decade now:

There are two hurdles. One is inflation. Price growth is running at 4.3 percent, well above the 2.5 percent target set by the inflation-targeting central bank. That was what triggered the May rate rise. Second, in Poland, as in Hungary, the central bank cannot afford to let the currency weaken much. A third of government and corporate debt is hard currency, while half of all mortgages are in Swiss francs. A fall in the zloty, caused by a rate cut, could raise defaults and problems for the banks. Continue reading

Samurai bonds = the New Black

What do Poland, South Korea and Mexico have in common? Apart from an OECD membership, each successfully placed a samurai bond issue in the past month. First let’s look at the tale of the tape and then we’ll think about why any of this matters:

Sources: S&P, Bloomberg, Bloomberg, FT

Ok, so what?
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