2+1 ‘winners’
Happy New Year. As weather warnings fade in favour of New Year’s resolutions, the UK embarks upon its first trading day of 2025. Some markets remain closed today with notable value date exceptions from Switzerland, Japan and New Zealand. As we highlighted earlier in the week, 2024 was characterised by the typically asynchronous existences of broad Dollar strength and developed market equity outperformance (particularly in the US). It is similarly uncommon for emerging market currencies to outperform during such a bout of Dollar strength. So, how did they perform?
By and large, poorly is the answer. On a trade weighted basis there were a broader range of identifiable winners. Within the developing market currency basket when measured against the US Dollar however, the only lesser-managed currencies of the Malaysian Ringgit and Thai Baht managed to keep their head above par. A win by technicality only is awarded to the Hong Kong Dollar which, pegged within a band, stands approximately 0.5% stronger on this day in 2025 than it did a year ago. So, it seems emerging market currencies have behaved more in line with expectations given the stronger Dollar.
In terms of those currencies that have shed the most weight, presumably now to be known as the Ozempic currency list, several compete for first place. Amongst the more economically significant EM nations, it is Brazil’s Real and Mexico’s Peso that battle it out for first and second place. South Africa’s Rand battled it out until the end to see whether it would suffer its fifth straight year of losses versus the Dollar. Ultimately it did, down circa 2.5% in a not too shabby performance. Despite risks posed by the potential for stagnation within political and economic reforms and the forthcoming second Trump administration, the Rand is forecast to outperform in 2025.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – German Election
Humphrey Percy
Wed 5 Feb 2025
German Election With just 18 days to go to the German election, tensions are building. The centre right CDU whose leader Friedrich Merz is likely to be the next Chancellor is under fire for proposing a tougher immigration policy. That says his critics is similar to the far right AFD and verboten given the antipathy […]
Daily Brief – Time to get a Thesaurus
Charles Porter
Tue 4 Feb 2025
Time to get a Thesaurus Removing tariffs just as quickly as President Trump thought to impose them is surely removing any elegance associated with Trump’s ‘favourite word in the dictionary’. On second thoughts, there likely never was any. In the two weeks that have passed since the President’s inauguration the tariff story goes something like […]
Daily Brief – Reckoning Days
Charles Porter
Tue 14 Jan 2025
Reckoning Days Despite it being less than one week until Donald Trump’s inauguration, markets are still fixated on the evolution of the UK’s bond market and its currency. The Chancellor may well have been hoping for some distracting headlines from the incoming President-elect. Unfortunately for her, those that have come from the Trump administration and […]
