He price of the raw Materials once again begins to have an impact on the world. In this case, the Petroleum It reached maximum levels of the year and once again threatened to reach US$100 a barrel. This has a full impact on the emerging economies and especially in Argentina, which despite the fact that the need to import becomes less thanks to the potential of Dead cow, It is an external factor that can impact the local economy to a greater or lesser extent.
The energy sector, which required strong demand for foreign currency in 2022 due to the war in Ukraine, this year will bring relief to the Central Bank. Only In the first seven months, energy imports fell by US$3.5 billion compared to the same period of the previous year. This 2023, the energy trade balancewhich is the difference between exports and imports, will close in balance, and by 2024 it is expected to be strongly in surplusa fact that has not occurred for more than a decade.
Oil rose 30% from the lows of the year and altered the dynamics of the developing countries. Rising crude oil prices revive pressures on global prices and reduce hopes of lower rates while impacting countries energy importers.
It is a change that can upset the bets of the optimists of the emerging markets, who had started the year on the right foot. Developing country assets appear increasingly vulnerable as the US promises to keep borrowing costs higher for longer and oil barrels approach the $100 barrier.
“It is clear that the disinflation trend in emerging markets without China has already faded,” said Jon Harrison, managing director of emerging markets macroeconomic strategy at GlobalData TS Lombard in London. “The oil prices are certainly a material part of it, but food prices, a stronger dollar and lower Chinese disinflation are additional drivers.”
The Bloomberg Emerging Markets Government Debt Index and the MSCI Developing Country Currency Index are approaching their second month of falls.
According to Tellimer strategist Hasnain Malik, Economies that depend on oil imports and those in which crude oil represents a high percentage of household income will be hardest hit. These include India, the Philippines, Pakistan, Jordan, Kenya and Morocco.
Vontobel Asset Management is trying to trim its position in markets that are highly dependent on oil imports, since the higher cost will affect the balance of payments and the currencies of the countriessaid Carlos de Sousa, an emerging market money manager.
Oil rise: how it impacts prices and the dollar
The impact of the rebound in oil prices Petroleum It is not uniform. For energy exporters such as Malaysia, Mexico and Saudi Arabia, the rise in crude oil prices is positive, as it can help increase public revenue.
Regarding currencies, the increase in crude oil prices and the dollar strength They are negative for the Philippine peso, the Indonesian rupiah, the Thai baht and the forint, according to Gaël Fichan, portfolio manager at Banque Syz SA.
“Rising oil prices will likely act as a tax on other economies that are net importers, reducing real incomes and slowing growth,” said Marcella Chow, strategist at global markets from JPMorgan Asset Management. “This could put pressure on the lowers its currencies and their central banks may have to keep interest rates at current levels, or even raise them, to protect their currencies.”
Source: Ambito
