From India to Brazil, emerging markets can shore up global economy

South Korea and Brazil are among those with further cuts likely on the horizon, while others like China and Thailand are proceeding more cautiously on further easing

Emerging-economy central banks from India to Brazil still enjoy the firepower to shore up the global economy as their peers from developed markets take to the sidelines. While policy makers at the Federal Reserve and European Central Bank are seemingly set to keep interest rates on hold, many of their developing nation counterparts have room to cut further. That should help support the world economy amid its weakest expansion in a decade.

“In most cases, emerging markets are now in the comfortable position to be able to cushion an economic downturn with monetary easing,” Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt, said in a report this month. “This easing of monetary policy is likely to give a lift to EM economies, and this would also be positive for developed countries.”

Faster Growth

That outlook was underscored this week by Morgan Stanley economists, who predicted emerging markets will grow 4.4% next year, more than three times the 1.3% rate anticipated in the Group of 10 economies.

After 20 of the 32 central banks monitored by the bank eased policy in 2019, its economists forecast 13 will do so in 2020 with the cuts concentrated in emerging markets helping to reduce the global weighted average policy rate to a seven-year low by March. India, Brazil, Indonesia and Turkey can all strike if they need to…

Here’s why Japan boasts the world’s most powerful force of retail traders

About 85 per cent of traders are men, mostly in their 30s, 40s and 50s, according to estimates from Gaitame

Popular tales of “Mrs Watanabe” — the canny Tokyo housewife who dabbles in currency trading in between school runs and shopping — barely begin to tell the story of Japan’s retail traders in the foreign exchange market.

With almost 800,000 active forex accounts, Japan boasts the world’s most powerful force of retail traders. It has doubled in size in little more than a decade and spurred some of the most dramatic price moves of recent times, including the January “flash crash” that hammered the dollar and sent the yen soaring.

Contrary to the enchanting notion of “Mrs Watanabe,” most of the traders are middle-age men, who’ve been driven into the market by years of ultra-low interest rates. They toil in offices by day and trudge home to moonlight in foreign exchange, hoping to build a family nest egg in a country where banks pay savers next to nothing.

“A lot of individual investors don’t realize that they’re doing something extraordinary,” says Yasushi Takagi, a 44-year-old financial writer who started forex trading in his early 30s to supplement his earnings. “They bet heavily on high-yielding currencies like the Turkish lira, the Mexican peso and the South African rand, while many players outside of Japan wouldn’t touch them.”