QE Tapering as a Wake-up Call for Emerging Markets
Summer was marked by a strong pressure of capital outflows and exchange rate devaluations in several systemically relevant emerging markets. A global portfolio rebalancing was put in motion on May 22, when talk of the U.S. Federal Reserve shrinking — and eventually reversing — its asset purchase program (QE or quantitative easing) was made public. ... Read more
BIS: Daily FX Turnover Averages $5.3 Trillion
The Economist drew from the latest survey of the Bank of International Settlements to create this Great Graphic that shows the average daily turnover of the top 16 currencies. Source: The Economist Average daily turnover is a mind-numbing $5.3 trillion. In three days foreign exchange turnover is sufficient to cover world trade in a year. The BIS conducts the survey ... Read more
The New Economic Nationalism, Part 1: A ‘Juche’ World
Commentators often assume that relatively unfettered trade in goods and services and free movement of capital are givens, but the drive toward greater economic openness could now be undergoing a reversal, with profound implications for the global economy. This piece, the first of a two-part series, looks at the drivers of this shift. Globalization reached ... Read more
EA BoP Guide: CA and KA – EA too Dependent on Portfolio Inflows?
This is part two of my multi-post commentary on the Euro area Balance of Payments (BoP). Yesterday, in part one, I compared the EA current account balance to its country-level cross section. Today’s post will be more instructive in nature, as I dig into the components of the EA current account (CA) and capital account (KA) balances. My general conclusion ... Read more