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Veksler: Emerging market crisis just 'media hype'
Crisis, what crisis? That's the message from trader, Ken Veksler, on claims emerging markets are being engulfed in another acute emergency. The Director of Accumen Management says the potential is there but what we've actually seen is just a depreciation of some currencies and increased volatility in stock markets.
The combination of tapering in the US and the weakening of emerging market economies have led to big currency swings; in January the Turkish Lira fell 6 percent, the South African Rand dropped 7.5 percent and the Russian ruble hit a five-year low. But Ken says much of the perceived problem has been inflamed by media hype.
Central Banks around the world are taking action; notably on 28 January, the Turkish central bank raised its benchmark one-week lending rate for banks from 4.5 percent to 10 percent in order to boost the lira. And Raghuram Rajan, the governor of the Reserve Bank of India, stepped out to criticise the gradual removal of accommodative monetary policy by the Fed.
Speaking about this, Ken says: “To be honest, it’s just silly. Not only has that move been telegraphed for months now but it’s not like there’s been an immediate stop to QE.”
He adds: “EM currencies are taking the brunt. Whether it becomes more structural and follows through down the road remains to be seen. There is potential for that to happen but the whole notion that it’s a crisis is just media hype.”
01:43 minutes
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