Pictet: Gangwechsel bei Schwellenländer-Währungen
"Schwellenländer-Währungen haben ihr tiefstes Niveau in den vergangenen 30 Jahren erreicht. Diese Schwächephase könnte bald enden", meint Patrick Zweifel, Chefvolkswirt bei Pictet Asset Management.19.05.2015 | 11:10 Uhr
Developing world currencies have experienced sharp falls over the past several months, making life difficult for investors in emerging market local currency debt. But this period of wholesale depreciation should not last much longer. Cheap valuations, a revival in EM exports and structural reforms point to a shift in currency dynamics.
If the currency markets were a stage, then the US dollar would be the star performer. Over the past four years, the US unit has gained some 25 per cent on a trade-weighted basis. Most remarkable has been its 14 per cent appreciation since the summer of 2014 – one of the strongest nine-month rallies on record. Investors in emerging market (EM) debt won’t be standing to applaud, however. For them, the US unit’s performance has been something to jeer.
That’s because the appreciation has exacted a particularly heavy toll on EM currencies over the past three years. In that time, the Russian ruble, the Brazilian real, the Turkish lira and the Indonesian rupiah have each lost more than 30 per cent against the US dollar. Even the Polish zloty and the Mexican peso – among the more resilient currencies in the developing world – have fallen about 16 per cent. This has been accompanied by an increase in exchange rate volatility which, in turn, has increased the currency risk inherent in EM local currency bonds. Research from the bank for International Settlements shows that yields on EM local currency bonds tend to rise when currency volatility increases.
However, the trends that have held in place over the past three years are beginning to fade. The first quarter of 2015 has seen EM currencies find a more stable footing, suggesting that this long period of wholesale depreciation could soon give way to a new phase - one in which countries’ idiosyncrasies have a bigger influence on valuations. Indeed, the conditions are in place for many EM currencies to begin appreciating once more.
Not only are many currencies trading below their fair value, but reforms underway in parts of Asia and Latin America should also give rise to a profound shift in currency markets. Some currencies will begin to put this period of depreciation behind them.
Back to the 1980s
The decline in EM currencies can be traced back to 2011. It was at this point that developing economies’ expansion first started to slow. So began a narrowing of the growth differential between the emerging and developed world that has persisted to this day. Currencies lost another support during the summer of 2013, when the US Federal Reserve laid the groundwork for an end to quantitative easing and interest rate hikes. Since then, the forces bearing down on EM currencies have multiplied to include a slowdown in China and a fall in commodity prices.