Currency News: British Pound Experiencing Large Volatility Amidst Uncertainty While Yuan Bottoms Out
Currency News
Investors Begining To Classify UK Pound Under Emerging Market Amidst Volatility
As the UK has become more focused on their arrangements for a post-Brexit country in 2017, the British pound has begun to experience rapid volatility. It had experienced a major crash to decades low last friday, hovering at around $1.20 per pound, with expectations of a further decline in sight.
Photo: Mark Hodson | Flickr | CC BY 2.0
As a result of the UK’s recent economic woes, many investors are beginning to consider the pound as an emerging market currency due to its major volatility. The has fallen 17% against the dollar over the past year, as a result of a negative economic outlook and a fear of political turmoil. Therefore, many investors are now benchmarking the pound against emerging market currencies. “Investors are increasingly casting U.K. assets in an emerging-market light, amid a fundamental re-appraisal of the country’s medium- to long-term economic fortunes,” Chris Scicluna, London-based strategist at Daiwa Capital Markets Europe Ltd, said in a phone interview.
Additionally, UK bond yields have outpaced those of their peers in the developed nation and have now begun to lose their status as a safe haven against market turmoil as a result. Usually government bonds are seen as a great alternative investment tool against market turmoil. Therefore, many investors are beginning to
Chinese Yuan Bottoming Out Against The USD
Although the Chinese yuan has hit a 6-year low this past week, most forex investors predict there is little room for a further decline, estimating between 0.3%-0.7% in 2017. Investors had been calm as the PBOC had been keeping the currency steady over the past month, as they had just entered the IMF’s currency reserve and hosted the Group of 20 Summit.
Now, investors are becoming a bit more nervous as Chinese debt overseas is beginning to take an effect on the currency. However, the outlook for 2017 remains positive as capital inflows are expected to increase more rapidly than outflows, boosting the exchange rate.
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