Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

Gautam Jain has over 25 years of experience covering global emerging fixed income and currency markets, both as a strategist and a portfolio manager. He has worked in buy-side and sell-side firms, including The Rohatyn Group (TRG Management), Barclays Capital, and Millennium Partners. He has helped manage emerging markets local-currency and hard-currency debt funds. The assets that he covers include currencies, interest rates, sovereign credits, and related derivatives. He specializes in portfolio construction, smart-beta index creation, and asset allocation. Mr. Jain holds a Ph.D. in Operations Research from Columbia University and is a CFA charter holder.

FX Dashboard: Is Monetary Policy Still Driving FX Returns?

FX Dashboard: Russian Ruble Is Lagging the Rally in Oil

FX Dashboard: Are EM Currencies in a Carry-Trade Environment?

FX Dashboard: Stay Bullish on the Chilean Peso

FX Dashboard: Chilean Central Bank Boosts the Peso with Aggressive Rate Hike

FX Dashboard: South African Rand’s Recent Underperformance to Continue

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

FX & Rates

<p>In this week’s Alpha Bites, we recommend buying the Chilean peso (CLP) against the South African rand (ZAR). The Chilean peso has been among the worst performers in EM over the past 6 months despite the recent hawkish surprise by its central bank. In contrast, the rand has fared much better despite worse macroeconomic fundamentals. Specifically, growth forecasts have been revised upwards for Chile but downwards for South Africa. The same is true with regards to inflation dynamics, which imply that Chile’s central bank should continue to raise rates while South Africa should stay on hold for the time being. Politics is a factor weighing on Chile, but the related risk premium is excessive in our view.</p>

In this week’s Alpha Bites, we recommend buying the Chilean peso (CLP) against the South African rand (ZAR). The Chilean peso has been among the worst performers in EM over the past 6 months despite the recent hawkish surprise by its central bank. In contrast, the rand has fared much better despite worse macroeconomic fundamentals. Specifically, growth forecasts have been revised upwards for Chile but downwards for South Africa. The same is true with regards to inflation dynamics, which imply that Chile’s central bank should continue to raise rates while South Africa should stay on hold for the time being. Politics is a factor weighing on Chile, but the related risk premium is excessive in our view.

Alpha Bites: Long Chilean Peso Vs Short South African Rand