“This is a multiyear dollar rally, and we’re at the start of it,” said Stephen Jen, co-founder of investment firm SLJ Macro Partners in London.
Archive for January, 2015
Mr Jen argues that emerging markets as a whole are still very exposed to a rising dollar after a rapid rise in foreign lending to the developing world over the past decade.
Most EM specialists remain relatively confident that aside from a few isolated problems, the developing world is not facing anything nearly as nasty or as systemic as the crises of the 1980s and 90s. But Mr Jen predicts that 2015 will be a tough year – with the initial tremours only the start.
“The euro has also become rather undesirable for central banks to hold,” Stephen Jen of hedge fund SLJ Macro Partners wrote to clients. “Nobody likes to hold a currency with a negative yield, and with the central bank managing the currency explicitly wanting the value of the currency to go down. “