Sep 14, 2018

The meltdown of emerging market currencies

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Data: OFX; Chart: Harry Stevens/Axios

Currencies in developing countries have fallen off a cliff. The Argentine peso has lost more than 50 percent of its value against the U.S. dollar this year, and the Turkish lira is doing almost as poorly.

What's going on: Argentina and Turkey are both suffering from fiscal crises that have hammered their currencies.

  • The Argentine government is struggling to finance its deficit, and even the world's highest interest rates aren't helping much in the midst of an economic crisis with surging inflation.
  • Turkey's central bank has also raised interest rates, despite President Recep Tayyip Erdogan’s repeated attempts to keep rates low. Geopolitical tensions with the U.S. also have not helped the economy's fragile state. It's unclear how much the rate hikes will restore long-term confidence in the lira.
  • A worsening trade war between the United States and China could cause more pain for emerging markets, which are export-dependent.

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Investors jump on the emerging markets bandwagon

Reproduced from TCW Group; Chart: Axios Visuals

A growing chorus of U.S.-based fund managers is betting that emerging market stocks and bonds are poised to outperform U.S. assets this year. The momentum for emerging markets has grown so strong that it has become almost a consensus trade, with investors even urging clients to buy EM junk bonds.

What's happening: Following 2019's blowout returns for U.S. stocks and strong performance for high yield, government and even municipal bonds, investors expect U.S. assets to fall to earth in 2020 and are positioning in emerging markets.

Go deeperArrowJan 14, 2020

Trump administration lays out case against Senate bill that would levy Turkey sanctions

President Trump and Turkish President Recep Tayyip Erdogan. Photo: Peter Nicholls/Pool/AFP via Getty Images

The Trump administration laid out its case against a Senate bill that would sanction Turkey for purchasing Russian-made defense systems and help Syrian Kurdish refugees immigrate to the U.S. in a State Department document obtained by The Daily Beast.

Why it matters: The document reveals how Turkey's actions have divided Trump officials and members of Congress, who have criticized the executive branch for not sanctioning Turkey for trading with Russia's defense and intelligence sectors.

Go deeperArrowDec 23, 2019

High court rules Turkey's ban on Wikipedia is unconstitutional

Photo: Mikhail Svetlov/Getty Images

A high court in Turkey ruled Thursday that the government's 2017 ban on Wikipedia is unconstitutional, the New York Times reports.

The big picture: President Recep Tayyip Erdoğan cracked down on freedom of expression in the wake of a failed 2016 coup, banning Wikipedia after the site refused to remove pages that the Turkish government found offensive. Advocates argued that the ban limited access to information and was a violation of free speech, while the government claimed that content on Wikipedia threatened national security.

Go deeperArrowDec 26, 2019