Saturday, September 13, 2008

Emerging Market Currencies Submerging

With a nod to the excellent Barchart site, we have charts of the U.S. dollar vs. the BRIC currencies: the Brazilian real (top chart); the Russian ruble (second chart); the Indian rupee (third chart); and the Chinese yuan (bottom chart). As we can see, the U.S. dollar has risen sharply against the real, ruble, and rupee during the same period that we've seen the U.S. stock market meaningfully outperform the equity markets in the emerging economies. Interestingly, the yuan has best held its value vs. the dollar, which means that the Chinese currency is actually showing relative strength compared with many world currencies. That is not a stimulus for exports, and it may pose a further drag on the Chinese economy.