Oil Crash Has Little Relevance to Emerging Markets in Virus Era - Bloomberg:
Time was when an oil-price rout almost certainly meant a currency meltdown in emerging markets. Now, it’s failing to cause as much as a flutter.
Sixteen of 25 developing-nation currencies analyzed by Bloomberg are trading near their highest levels in at least 15 years against Brent crude, the benchmark for more than half of the world’s oil. And all but two of them have a correlation coefficient of less than 0.3 with the commodity, signaling crude-price moves have little impact.
The breakdown of oil’s traditional influence on emerging markets shows that currencies are driven more by the economic outlook in the coronavirus era and are treating the oil slump as an idiosyncratic story. They could rebound once the pandemic subsides and national lock-downs are lifted, even if oil prices are slow to respond.
Time was when an oil-price rout almost certainly meant a currency meltdown in emerging markets. Now, it’s failing to cause as much as a flutter.
Sixteen of 25 developing-nation currencies analyzed by Bloomberg are trading near their highest levels in at least 15 years against Brent crude, the benchmark for more than half of the world’s oil. And all but two of them have a correlation coefficient of less than 0.3 with the commodity, signaling crude-price moves have little impact.
The breakdown of oil’s traditional influence on emerging markets shows that currencies are driven more by the economic outlook in the coronavirus era and are treating the oil slump as an idiosyncratic story. They could rebound once the pandemic subsides and national lock-downs are lifted, even if oil prices are slow to respond.
No comments:
Post a Comment