Currency Check: More Downside for Emerging Markets?

The video discusses the impact of US fiscal policy and potential trade wars on emerging market currencies, highlighting the shift of investments towards the US due to rising bond yields. It examines foreign exchange volatility, particularly the effects on the yen and yuan, and the role of interest rate differentials. The discussion also touches on the potential consequences of trade tensions between the US and Asia, emphasizing the importance of cooler heads prevailing to avoid negative trade ramifications.

What is causing the shift from emerging market currencies to the US bond market?

• Rising inflation in emerging markets

• Increased fiscal spending in the US

• Decreasing bond yields in the US

• Strengthening of emerging market currencies

Which currencies are most vulnerable to US trade policies?

• Australian Dollar and Canadian Dollar

• Korean Won and Chinese Yuan

• Indian Rupee and Brazilian Real

• Euro and British Pound

What is the primary reason for the expected weakening of the Japanese yen?

• Widening interest rate differentials with the US

• Decreasing exports from Japan

• Increased fiscal spending in Japan

• Strengthening of the Euro

How have the Chinese authorities attempted to manage the yuan's value?

• By increasing interest rates

• By imposing tariffs on US goods

• By preventing it from devaluing rapidly

• By reducing fiscal spending

What is the potential impact of a 45% tariff on Chinese goods?

• No impact on the Chinese yuan

• Strengthening of the Chinese yuan

• Increased enthusiasm from PBOC to defend the yuan

• Devaluation of the Chinese yuan