RMB Risks
While a currency crisis in China can be avoided, much depends on investor psychology and how China manages the capital account.
Currency
What’s Next for the US Dollar?
Even given the recent decline in the dollar, we still view the currency as vulnerable in the near term, but it ultimately has more to run before the next depreciation cycle begins.
Assessing the Likelihood of Another EM Currency Crisis
We do not anticipate a systemic emerging markets currency crisis like that of the late 1990s, though EM currency weakness and volatility are likely to persist for the next few years.
Has the Rapid Rise in the US Dollar Changed Our View on Currency Hedging for US$ Investors?
We continue to believe US$-based investors should hedge a portion of non-US$ currency exposure, particularly that associated with tactical positions in non-US$ assets.* Strategic hedging to mitigate currency volatility may also be appropriate for investors with large allocations (e.g., 20%–25% or higher) to foreign currencies.** We maintain this recommendation even as we regard the US…
Investment Publications Highlights: March 2015
European Economics: Core of the Matter Christel Aranda-Hassel, Mirco Bulega, Neville Hill, Sonali Punhani, and Giovanni Zanni, Credit Suisse, February 27, 2015 European inflation has consistently disappointed since mid-2013. Credit Suisse believes the Eurozone is not experiencing deflation given the decline in prices is not broad-based, inflation expectations are picking up, and the European Central Bank…
What’s Next for the US Dollar?
This chart book provides context on previous US dollar rallies and where the dollar is in the current cycle.
Investment Publications Highlights: February 2015
Fasten Your Greek Belts Christel Aranda-Hassel et al., Credit Suisse, February 2, 2015 The rise of Syriza in Greece has turned the market’s attention once again to the possibility of the country leaving the Eurozone. The European economics team at Credit Suisse contends that it is in the best interest of both Greece and Europe…
Is the Stronger Dollar Impacting US Companies’ Earnings?
A number of companies have blamed the strengthening dollar for disappointing fourth quarter and 2015 earnings guidance. With about 65% of S&P 500 companies having reported, headlines that around 75% of firms are beating expectations obscure the reality of forecasts that have steadily been marked lower. Growth for the quarter (year-over-year) is expected to be…
US Dollar Strength: Here to Stay?
US dollar strength has been building for some time, with the trade-weighted index on an uptrend since mid-2011. However, until the middle of this year the dollar rally had been hesitant, with movements in underlying major currency pairs idiosyncratic. But since early July, the US dollar has strengthened rapidly against a basket of currencies as…
Escalator Up, Elevator Down? Recent RMB Weakness
China’s currency recently experienced its sharpest decline since it unpegged from the US dollar nearly nine years ago. China wants a more volatile exchange rate to introduce two-way risk in the currency market, meaning a continued steady rise in its currency is not a foregone conclusion. To help offset slowing investment growth, Chinese authorities may…