Emerging Markets: What Has Changed - Friday, Feb. 17

The assassination of Kim Jong Un’s half-brother suggests the political situation in North Korea may be heating up. Coming on the heels of the recent missile test, some political analysts believe that Kim Jong Un is becoming more erratic.  

The Polish central bank is tilting more hawkish. MPC member Zubelewicz said he can’t exclude a rate hike in 2017. He noted that “If risk of inflation staying above central bank reference rate increases and starts to negatively impact savings, I would expect discussion and votes within MPC.” Prior to this, MPC members had been targeting 2018 for the start of the tightening cycle. 

The Turkish central bank said it will allow domestic companies to use liras to repay export loans. Companies will be allowed to use the bank’s FX purchase rate set on January 2 to pay off export loans maturing by May 31. This is just the latest of several unconventional moves to support the lira.  It should lessen the need for companies to convert liras into foreign currencies to repay their loans.

Nigerian President Buhari may re-emerge into the public eye soon. Rumors of ill health have dogged Buhari all year. Local press reports suggest he is fit and will return to Nigeria from UK, where he has been receiving medical treatment. Buhari reportedly met the press and House of Representatives Speaker Yakubu Dogara in London Wednesday.

South African regulators are investigating a dozen banks in New York and Johannesburg for possible collusion in off-shore ZAR trading. The Competition Commission said price-fixing has been going on since 2007, and that the investigation began in 2015. Regulators are reportedly seeking maximum fines equal to 10% of their turnover, but banks that cooperate are likely to be granted leniency.  

Mexico’s President Pena Nieto has reportedly asked Banco de Mexico Governor Carstens to stay on until December due to the ongoing risks facing the economy. Carstens has reportedly agreed to do so. Carstens had previously announced plans to step down in July and join the Bank for International Settlements in October.

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