Written by my colleague Dr. Win Thin
- Prime Minister Phuc said Vietnam will ease the limits on foreign ownership of banks this year.
- Russia’s government is working on measures to limit ruble volatility, including possible FX purchases.
- Turkey’s central bank start auctioning FX swaps to help support the lira.
- Brazil’s central bank resumed rolling over FX swaps.
- Brazilian Supreme Court Judge Zavascki was tragically killed in a plane accident.
- Chile’s central bank started the easing cycle.
- Mexico significantly lowered its FDI forecast for 2017.
In the EM equity space as measured by MSCI, Turkey (+2.1%), Qatar (+2.1%), and Brazil (+2.0%) have outperformed this week, while Russia (-1.8%), Thailand (-1.5%), and South Africa (-1.0%) have underperformed. To put this in better context, MSCI EM fell -0.4% this week while MSCI DM fell -0.2%.
In the EM local currency bond space, Turkey (10-year yield -10 bp), Brazil (-10 bp), and Malaysia (-4 bp) have outperformed this week, while Poland (10-year yield +11 bp), Colombia (+8 bp), and Czech Republic (+7 bp) have underperformed. To put this in better context, the 10-year UST yield rose 9 bp this week to 2.49%.Â
In the EM FX space, PEN (+1.6% vs. USD), BRL (+0.9% vs. USD), and COP (+0.5% vs. USD) have outperformed this week, while TRY (-2.5% vs. USD), MXN (-1.5% vs. USD), and PHP (-0.6% vs. USD) have underperformed.Â
Prime Minister Phuc said Vietnam will ease the limits on foreign ownership of banks this year. The current limit is 30%, but the new ceiling was not specified. Phuc added that the government is willing to sell underperforming banks “entirely.â€Â
Russia Deputy Prime Minister Shuvalov said the government is working on measures to limit ruble volatility, including possible FX purchases. The central bank later issued a statement saying that it “will not deviate in any way from the floating exchange rate regime.†It added that any purchases of FX would be limited to the amounts of excess revenue coming from higher-than-forecast oil prices.Â
