Hungary’s central bank in policy bind

August 17, 2011

Pity Hungary’s central bank. If ever there was a country that needed an interest rate cut, here it is.  With the euro zone in the doldrums, the Hungarian economy is taking a big hit, with April-June growth coming in at a measly 1.5 percent on an annual basis, well below expectations. Quarter-on-quarter growth was in fact zero. Data last week showed annual inflation at two-year lows last month. Despite a cut to personal income tax rates this year, household consumption is stagnating. Unemployment is running at 11 percent. 

from Global Investing:

Counting the costs of Hungary’s Swiss franc debt

August 11, 2011

The debt crises in the euro zone and United States are claiming some innocent bystanders. Investors fleeing for the safety of the Swiss franc have ratcheted up pressure on Hungary, where thousands of households have watched with horror as the  franc surges to successive record highs against their own forint currency. In the boom years before 2008,  mortgages and car loans in Swiss francs seemed like a good idea --after all the forint was strong and Swiss interest rates, unlike those in Hungary, were low.  But the forint then was worth 155-160 per franc. Now it is at a record low 260 -- and falling -- making it increasingly painful to keep up repayments. Swiss franc debt exposure amounts to almost a fifth of Hungary's GDP. And that is before counting loans taken out by companies and municipalities.

Give me liberty and give me cash!

June 22, 2011

Come back Mr Fukuyama, all is forgiven.

In his 1992 book “The End of History and the Last Man”, American political scientist Francis Fukuyama famously argued that all states were moving inexorably towards liberal democracy. His thesis that democracy is the pinnacle of political evolution has since been challenged by the violent eruption of radical Islam as well as the economic success of authoritarian countries such as China and Russia.

The iPod – the iCon of Chinese capitalism

June 7, 2011

Walking past Apple’s sleek shop along London’s Regent Street on Sunday, my wife asked me what I wanted for Father’s Day.

Could Turkey’s central bank surprise markets this month?

April 20, 2011

TURKEY/This Thursday, Turkey’s new central bank governor Erdem Basci will chair his first monetary policy meeting.  What can we expect from the man who is seen now as the architect of the country’s novel monetary policy? Most analysts predict there will be no change this month to interest rates and banks’ reserve requirement ratios. But could the bank, which shocked markets with an out-of-the-blue  rate cut in December and a big further rise in short-term RRRs last month, throw another  curveball? 

from Global Investing:

Russia’s babushka time-bomb

March 24, 2011

The babushka, that embodiment of Russian grandmotherly goodness that has spawned iconic dolls and inspired a Kate Bush song, poses one of the gravest threat to the Russian economy.

The promise of middle age

February 28, 2011

The wave of popular discontent now sweeping the Middle East and North Africa has been driven by the region’s youth, frustrated by chronic umemployment and enraged by widespread corruption.

from Global Investing:

Jean-Claude Trichet, EM c.bankers’ new friend

February 2, 2011

What a friend emerging central bankers have in Jean-Claude Trichet. Last month the ECB boss stopped euro bears in their tracks by unexpectedly signalling concern over inflation in the euro zone. Since then the euro has pushed steadily higher  -- against the dollar of course, but also against emerging currencies. The bet now is that interest rates -- and the yield on euro investments -- will start rising some time this year, possibly as early as this summer.

Building BRICs in Africa

November 23, 2010

Some eye-catching numbers from Standard Bank out today on the influence of BRICs countries — Brazil, Russia, India and China — on Africa.