What has changed in EM - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers shares his views on the emerging markets:

"Malaysia’s central bank said it will allow investors to fully hedge their currency exposure.  However, details remain scant.  Note that the current limit is up to 25% of their assets.  Assistant Governor Zahid also said that all domestic investors will be allowed to short-sell government bonds to boost market liquidity.  Currently, only banks are allowed to take short positions. The latest steps will take effect on May 2."

"Egypt declared a 3-month state of emergency after two deadly church attacks.  ISIS took credit for the attacks on Palm Sunday.  In related news, Israel closed its Taba border crossing with Egypt and warned of “imminent” attacks."

"South Africa’s parliamentary no confidence vote has been delayed.  It was originally scheduled for April 18, but the Constitutional Court will first have to rule on the opposition’s request for a secret ballot."

"Argentina central bank surprised markets with a 150 bp hike to 26.25%.  It noted that data “monitored by the central bank suggest inflation in April could continue at a higher level than is compatible with the path established by the monetary authority."  This was the first change in the 7-day repo rate since it was adopted as the main policy rate.  Move came after higher than expected CPI reading for March"

"Brazil central bank accelerated the easing cycle with a 100 bp cut in the Selic rate.  It noted that for now, this acceleration of the easing cycle remains appropriate.  That suggests that it will probably cut 100 bp at each of the May 31 and July 26 meetings."