Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>The Hungarian central bank increased the size of the rate hike from the previous meeting, but it failed to provide much support to the currency.</li>
<li>I expect the forint to lag in the near term unless the central bank turns more aggressive because real rates remain negative and the carry of the currency is low.</li>
<li>Complicating the task of the central bank are the upcoming election in 2022, which has led to the prime minister ramping up pre-election spending, adding to inflationary pressures.</li>
</ul>


The Hungarian central bank increased the size of the rate hike from the previous meeting, but it failed to provide much support to the currency.
I expect the forint to lag in the near term unless the central bank turns more aggressive because real rates remain negative and the carry of the currency is low.
Complicating the task of the central bank are the upcoming election in 2022, which has led to the prime minister ramping up pre-election spending, adding to inflationary pressures.


Forint to Lag Even as the Hungarian Central Bank Raises the Pace of Rate Hikes

<ul>
<li>In my monthly recap note , I provide a performance update of my weekly trade recommendations in emerging markets FX and rates</li>
<li>Of the total of 27 trade recommendations made so far, I have recommended closing 18 of which 15 were in the money.</li>
<li>I also go over my open trade recommendations as well as those that I have closed recently.</li>
</ul>


In my monthly recap note , I provide a performance update of my weekly trade recommendations in emerging markets FX and rates
Of the total of 27 trade recommendations made so far, I have recommended closing 18 of which 15 were in the money.
I also go over my open trade recommendations as well as those that I have closed recently.


Alpha Bites: Performance Summary of Trade Recommendations – November 2021

Between July and October, Asian currencies underperformed against the rest of EM. In this note, I address the question: Is the period of underperformance for Asian currencies now behind? With the economic recovery back on track as coronavirus cases drop amid high levels of vaccinations, further monetary easing no longer in the cards, and FX interventions slowing, I expect Asian currencies on aggregate to trade broadly in line with the rest of EM in the near term but not outperform. From a strategy standpoint, I would opportunistically target specific currencies that have underperformed, such as the Thai baht.Separately, the attached file is a snapshot of the EM currency market in which I seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

Between July and October, Asian currencies underperformed against the rest of EM. In this note, I address the question: Is the period of underperformance for Asian currencies now behind? With the economic recovery back on track as coronavirus cases drop amid high levels of vaccinations, further monetary easing no longer in the cards, and FX interventions slowing, I expect Asian currencies on aggregate to trade broadly in line with the rest of EM in the near term but not outperform. From a strategy standpoint, I would opportunistically target specific currencies that have underperformed, such as the Thai baht.Separately, the attached file is a snapshot of the EM currency market in which I seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

Is the Period of Underperformance for Asian Currencies Over?

A month ago, I recommended hedging broad EM currency exposure with the euro. In this note, I first evaluate how well the hedge worked and then address the question of whether to continue to hold the hedge or not. I demonstrate that the hedge has been very effective based on the hedged returns and I also recommend continuing to hold on to the hedge as risks remain on the horizon.Separately, the attached file is a snapshot of the EM currency market in which I seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

A month ago, I recommended hedging broad EM currency exposure with the euro. In this note, I first evaluate how well the hedge worked and then address the question of whether to continue to hold the hedge or not. I demonstrate that the hedge has been very effective based on the hedged returns and I also recommend continuing to hold on to the hedge as risks remain on the horizon.Separately, the attached file is a snapshot of the EM currency market in which I seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

How Effective Has the Euro Hedge Been for EM FX?

After strengthening through early October, the US dollar has turned trendless. I evaluate the change in performance of EM currencies when the dollar was at a peak versus now. Specifically, I go over the regional and country divergences to identify the outperformers and underperformers. I also highlight the currencies where I see the most value.Separately, the attached file is a snapshot of the EM currency market in which I seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

After strengthening through early October, the US dollar has turned trendless. I evaluate the change in performance of EM currencies when the dollar was at a peak versus now. Specifically, I go over the regional and country divergences to identify the outperformers and underperformers. I also highlight the currencies where I see the most value.Separately, the attached file is a snapshot of the EM currency market in which I seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Updating EM FX Winners and Losers

China

The Chinese renminbi (yuan) is the official currency of The People's Republic of China. 

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Forint to Lag Even as the Hungarian Central Bank Raises the Pace of Rate Hikes

I expect the forint to lag in the near term unless the central bank turns more aggressive because real rates remain negative, the carry of the...

Gautam Jain, PhD, CFA

Alpha Bites: Performance Summary of Trade Recommendations – November 2021

I provide a performance update of all my trade recommendations along with discussing the open trades. I have recommended closing 18 of the 27...

Gautam Jain, PhD, CFA

Is the Period of Underperformance for Asian Currencies Over?

After underperforming between July and October, I expect Asian currencies on aggregate to perform broadly in line with the rest of EM in the near...

Gautam Jain, PhD, CFA

How Effective Has the Euro Hedge Been for EM FX?

In this note, I first evaluate how well has the euro hedge for EM FX that I recommended a month ago worked and then address the question of whether...

Gautam Jain, PhD, CFA

FX Dashboard: Updating EM FX Winners and Losers

As the US dollar turns trendless, I go over the regional and country divergences to identify the outperformers and underperformers in EM. I also...

Gautam Jain, PhD, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)