Foreign Exchange News Today: China Slowdown Turns ?Fragile Five? Currencies into ?Troubled Ten? as Pound Sterling Prospers

August 18, 2015 - Written by Toni Johnson

STORY LINK Foreign Exchange News Today: China Slowdown Turns ?Fragile Five? Currencies into ?Troubled Ten? as Pound Sterling Prospers

US Inflation and FOMC Minutes to Drive Foreign Exchange Rate Movement Today

Extensive currency market movement could follow the publication of two key US releases - the nation's inflation figures and the minutes from the last Federal Open Market Committee policy meeting. If the data supports the case in favour of a September rate adjustment the 'Greenback' could surge. However, if the reports reduce the odds of an adjustment taking place higher risk currencies may climb.

Earlier...

Emerging Market Currencies (INR, TRY, ZAR) Struggle as Chinese Concerns Weigh

The Emerging Market rout has continued during the past 24hrs with the world’s minor currencies, and in particular those based in Asia, continuing to suffer thanks to worries regarding the Chinese economy. The Shanghai SSE Composite stock index endured another nightmare session last night, shedding over 6% of its value on the day as investors continued to fret about the slowdown in local economic activity.

Hans Redeker, global head of FX strategy at Morgan Stanley, helped the venerable investment bank coin the ‘Fragile Five’ moniker to describe the less-traded global currencies which it considered vulnerable to an Emerging Market sell-off. The most significant of these units was perhaps the Indian Rupee (currency : INR) but the list also included the Brazilian Real (currency : BRL), the South African Rand (currency : ZAR), the Turkish Lira (currency : TRY) as well as the Indonesian Rupiah (currency : IDR).

Exchange Rate Forecast: Will AUD NZD Decline?

The list was compiled by Morgan Stanley’s’ top analysts during the Summer of 2013 and was comprised tenders which Redeker and his team considered to be over-dependent on foreign investment for their continued well-being. The slowdown in the pace of Chinese economic activity which has ensued during the two years which have followed has helped Morgan Stanley’s prophesy come true and all five have been hit hard by the development; with four of the world’s eight worst performing currencies over the past 24 months coming from the ‘Fragile Five’.

Thai Baht, Singapore Dollar, Taiwan Dollar Conversion Rate Outook

The same strategists at Morgan Stanley amended their advice earlier this week by expanding the ‘Fragile Five’ into the ‘Troubled Ten’ in light of the sharp deterioration in investor sentiment towards China during recent weeks. The expanded list has an Asian feel, with the Thai Baht (currency : THB), the Singapore Dollar (currency : SGD), the Taiwan Dollar (currency : TWD) and the South Korean Won (currency : KRW) also included. Redeker explained earlier that, ‘the biggest concern is that we are not going to turn the corner and the economic performance in China will continue to disappoint. Investors will watch China data closely and trade the Yuan accordingly.’

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts Currency Predictions Pound Aus Forecasts