Yield Curve Steepening Would Be Bigger Risk for EM Than Inversion, Mizuho's Varathan Says

The transcript discusses the dynamics of the yield curve, focusing on the risks of steepening versus inversion and its impact on emerging markets (EM). It highlights the vulnerability of EM currencies like the Indian rupee and Indonesian rupiah to oil price fluctuations and tightening dollar liquidity. The discussion also covers the Chinese authorities' approach to defending the renminbi against the psychological barrier of 7, balancing it with FX reserves management.

What is considered a bigger risk for emerging markets in the short run?

• Rising stock prices

• Flat yield curve

• Steepening of the yield curve

• Inversion of the yield curve

Which countries are identified as weak spots due to oil risks and dollar liquidity?

• South Africa and Nigeria

• Brazil and Argentina

• India and Indonesia

• China and Japan

Which currency is considered more attractive in the Asian market under a neutral dollar view?

• Indian Rupee

• Philippine Peso

• Indonesian Rupiah

• Malaysian Ringgit

What is the psychological barrier for the Chinese renminbi that authorities are concerned about?

• 8

• 5

• 6

• 7

What is the trade-off faced by Chinese authorities in defending the renminbi?

• Decreasing inflation

• Increasing interest rates

• Maintaining FX reserves

• Reducing exports