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”.
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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