Emerging Currency Review – Feb. 2009


We can  get a great feel of long term currency strength  from the Economist Magazine statistics section.

The first data I review is the Trade, exchange rates, budget balance and interest rates.  To get to these stats from the Economist home page, click on “markets and data.”   Then click on “weekly indicators”.

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The first figure we review is  the interest rate (second to right column).

Turkey 14.31%
Pakistan 14.68%
Argentina  16.69%
Brazil 12.66%
Venezuela  17.06%
Iceland 18.27%

Next we review the countries to see if any have a balanced budget (or near balanced).

Argentina 0.2%
Iceland 0.3%

Finally we look to see if any countries has a positive balance of payments.

Argentina
Venezuela

Finally we would look for a currency that has dropped a lot versus the dollar…which is not the Argentine peso

This initial review suggests that  the Argentina currency looks fundamentally strong. I am ignoring Venezuela because its currency is not allowed to move in the free market and the numbers most likely do not reflect the reality created by falling oil prices.

The recent lesson Major Currency Review showed Danish kroner as a major currency with strong potential for income and forex appreciation.

A review of the currencies I hold below shows how much I am overweight in the kroner.  This review also shows that I do not have the Argentine peso… but have Turkey and Brazilian currencies instead.  These were positions taken  before the current drawback.

I’ll be looking at the peso now.

However we have more to review before coming to conclusions. more on this in upcoming lessons.

Liquid Portfolio Currency Allocation
Brazilian real              4%
Denmark kroner      33%
euro                            31%
British pound           10%
Turkey lira                8%
US$                            14%

Gary

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