1 Dollar flourishes, emerging market currencies
struggle (Linda Yueh on BBC) From the South African rand to the Brazilian real
to the euro, currencies are weakening to the lowest levels in over a decade
against the dollar. The dollar, measured against a basket of its trading
partners, has reached the highest level since 2003 - the last time that it
traded at parity with the euro.
Of course, it's not just the dollar strength.
Currencies trade in pairs, so it also partly has to do with the euro's slide as
the European Central Bank launched quantitative easing, or QE, for the first time
on Monday.
The weakening of emerging-market currencies also
reflects structural weaknesses such as large external deficits which were last
highlighted during the so-called "taper tantrum" a couple of summers
ago. That was when the Fed first hinted that its QE programme would end, and
investors left the economies that were seen as risky and returned to safer
destinations to park their money.
Cheaper commodity prices is a key difference between
2013 and now. Oil prices plunging and other commodities also dropping in price
have helped not just inflation but also reduced the trade deficit. But, the
reverse side of that is the commodity exporters. Brazil and South Africa are
facing outflows of capital as their currencies have respectively hit their
lowest levels in 11 and 13 years.
Indonesia's growth is also affected since
commodities account for two-thirds of exports and the rupiah had hit its lowest
level since 1998, which was the tail-end of the Asian financial crisis. From
China to South Korea, 17 central banks have cut interest rates this year to
boost their economies. Investors are also anticipating a rate rise in the US,
so the gap makes the dollar even more attractive.
2 India millionaires leaving in droves (Eric Bellman
in The Wall Street Journal) India may have been minting millionaires at an
unprecedented rate over the past decade, but it has also seen many of its
seven-figured-citizens escape to other countries.
The latest Knight Frank’s annual Wealth Report estimates
that more than 43,000 Indian millionaires left the country to settle elsewhere
in the past 10 years. That is second only to China, which saw a private-plane
drain of more than 76,000 people, according to estimates from property company
Knight Frank and immigration consultancy Fragomen.
While Indians tended to take their railway cars full
of rupees to other English-speaking countries, government restrictions have
slowed the flow of Indian millionaire money in recent years, said Liam Bailey,
global head of research at Knight Frank
China lost the most rich migrants as 76,200 of its
millionaires left to settle in places like Hong Kong, Singapore, the US and
Australia. After the two billion-person emerging markets, the biggest losers in
terms of millionaire migrants were France, Italy, Russia, Switzerland and
Indonesia. You wouldn’t think the rich and famous would be so anxious to leave
Europe but apparently high taxes on the high earners encouraged many to leave.
In terms of the countries that attracted the most
millionaire migrants, the UK was the leader by a huge margin. Around 114,000
rich folks from elsewhere settled in the quaint island nation during the 10
years through 2014. It was followed by Singapore, which attracted more than
45,000 new, rich citizens, the US, which welcomed 42,000 elite expats and
Australia, which became home to 22,000 rich newcomers.
3 Countries have feelings too (Gideon Rachman in
Straits Times) Just before Mr Alexis Tsipras was elected Greek Prime Minister
in January, he made a vow to the voters: "On Monday, national humiliation
will be over. We will finish with orders from abroad."
Anyone tempted to dismiss this stress on national
humiliation as a Greek eccentricity should look around the world. When I think
about the international issues over the past year - Russia, the euro zone, the
Middle East and East Asia - a theme that links them is the rhetoric of national
or cultural humiliation.
One of Mr Tsipras' first acts as Prime Minister was
to visit a memorial to Greek resistance fighters executed by the Nazis in World
War II. This gesture was all about national pride: reminding voters of past
heroism while inflicting a little return humiliation on the Germans, who led
the pack of euro zone creditors.
The Greek government came into office promising to
slash the country's debt and ditch economic austerity. But even though Mr
Tsipras' left-wing Syriza party's confrontational approach did very little to
achieve these goals, voters enjoyed the show of defiance. Syriza's poll ratings
went up, even as deposits in Greek banks shrank.
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