Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Property

Zoopla wins back customers from online property rival

Zoopla chief executive Alex Chesterman has branded rival OnTheMarket “a failed experiment”, and said that his property site was winning back customers at a record rate. OnTheMarket was set up last year, aiming to compete with Zoopla and Rightmove, the UK’s two biggest property portals. It allowed estate agents to list their properties more cheaply […]

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Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Banks

BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Archive | November, 2016

RBS backtracks on Iranian account closures

Posted on 20 December 2013 by

Royal Bank of Scotland has agreed to suspend the closure of UK bank accounts belonging to nine Iranians who claim they are being discriminated against because of their nationality.

The nine brought a case under the Equality Act after being given 60 days notice by the bank that their facilities would be withdrawn. They had sought an injunction but RBS agreed voluntarily to maintain their accounts until a further hearing.

    The letter came days before RBS paid $100m to US regulators to resolve allegations that it has violated sanctions prohibiting business dealings with Iran and other regimes.

    Financial institutions have become warier of dealing with some countries and their citizens as authorities tighten sanctions.

    In the UK, Barclays recently tried to close the accounts of companies that sent money from Somali migrants back home amid fears some of it could be financing pirates and terrorists.

    However, Dahabshiil, the largest business, won an injunction in November preventing the closure pending a court hearing, arguing it had not been accused of wrongdoing.

    The UK government has promised to create a “safe corridor” for payments that support millions in Somalia.

    Blackstone Solicitors in Hale, Cheshire, has brought the RBS case. Emma Nawaz, managing director, said many of her clients had UK passports and ran UK-based companies. She accused the bank of “ethnic profiling”.

    “Their businesses have been affected because they cannot get funding. Some are wondering whether they can get another account and whether they are able to continue to live here.”

    Ms Nawaz said she had been contacted by six more people whose facilities were being withdrawn this week alone.

    In the next few months Manchester county court will hear her application for a group litigation order, a class action that would allow others to join the case. RBS, which is 81 per cent owned by UK taxpayers, made a voluntary undertaking before the court not to close accounts ahead of that hearing.

    RBS said: “We are required to comply with our regulatory obligations and are unable to comment on decisions made in relation to individual accounts.”

    In 2011, Iran’s state-run news channel Press TV announced that NatWest, an RBS subsidiary, had frozen its British bank account.

    The English language channel, which is based in Tehran but has an office in London, said at the time that NatWest had refused to provide an explanation.

    This year in the US a group of Iranian students at the University of Minnesota started a “No to TCF Bank’s action against Iranian students” Facebook group after the bank closed their accounts without warning. The National Iranian American Council said TCF Bank was discriminating against the students.

    In 2012, TD Bank in Canada froze bank accounts of Iranian-Canadian customers, telling them that it was due to recent changes to sanctions regulations. The bank insisted it was not targeting a community but complying with federal regulations.

    Hong Kong shows its claws over Tiger Asia

    Posted on 20 December 2013 by

    Two US-based hedge fund managers have been ordered to pay HK$45m (US$5.8m) to compensate investors, having admitted to insider trading in Hong Kong after a fight to block the regulator from taking action against them.

    Tiger Asia and two of its senior managers, Bill Sung Kook Hwang and Raymond Park, lost a string of appeals in the past two years as they tried to stop the Securities and Futures Commission from using a civil court process to punish them.

      The SFC used the civil court because it wanted to keep an option to pursue either a criminal case or a misconduct tribunal against them if they ever came to Hong Kong and allowed themselves to be arrested.

      “Tiger Asia’s admissions of insider dealing and manipulation vindicate the SFC’s allegations made at the outset of these proceedings,” said Mark Steward, SFC head of enforcement.

      It is the second court victory in a week for the SFC after Du Jun, a former Morgan Stanley banker convicted in 2009 of insider trading, was ordered to pay HK$24m to more than 290 investors in the first court ruling of its kind in the city.

      Tiger Asia, set up by protégés of Julian Robertson, one of the world’s best-known hedge fund managers, was accused of insider trading in the shares of China Construction Bank and Bank of China in 2008 and 2009.

      The case became a big test of the regulator’s powers to act against wrongdoing by people based outside of its jurisdiction. This was hugely important for the SFC because almost half of stock trading in Hong Kong is done by investors based offshore.

      The regulator is also seeking an order from the Market Misconduct Tribunal to ban Tiger Asia and the two managers from trading in Hong Kong for up to five years.

      A third manager at the fund, William Tomita, has been exonerated after the SFC accepted that he was a junior member of the team acting on instructions and was not knowingly involved in the misconduct.

      Tiger Asia and the two managers have already paid the HK$45.3m into a court escrow account and the money will now be disbursed to about 1,800 investors who lost out from trading the stock of CCB and BoC with Tiger Asia.

      “Investors are unable to detect, or avoid transacting with, wrongdoers in the market and so they are highly vulnerable to this kind of misconduct,” said Mr Steward. “It is right and fair that these transactions should be rescinded so that the 1,800 innocent investors may be put back, as closely as possible, to the positions they were in before the transactions took place.”

      Tiger Asia and the two managers, who remain in the US, could not be reached for comment.

      Turkish lira tumbles amid tensions

      Posted on 20 December 2013 by

      ©AFP

      The Turkish lira hit an all-time low against the dollar on Friday amid the country’s worst corruption scandal for years, in a tumble that highlights concerns about political risk and the economy’s dependence on hot money.

      The currency went below TL2.095 to the dollar on Friday, the latest slide in a week marked by the US Federal Reserve’s decision to rein in monetary stimulus and the arrest in Turkey of three sons of cabinet ministers in a scandal allegedly involving millions of dollars in bribes. The lira later recovered some of the lost ground.

        “[The] deepening turmoil in Turkey is not just political,” Strobe Talbott, head of the Brookings Institution, said via Twitter. “[The] stakes are geopolitical. Stable, secular, moderate state is crucial to region and world.”

        The lira later recovered to TL2.088 after the central bank sold $400m in foreign exchange in a bid to defend the currency – a strategy that analysts doubt will prove sustainable.

        “As long as political tension remains high that will keep foreign exchange demand high, [and] the central bank’s foreign exchange sales will not reverse the trend in the lira,” wrote Ozgur Altug at BGC Partners in Istanbul, noting the central bank has only about $42bn in net reserves – equal to around two months of imports.

        The central bank has proved reluctant to increase headline interest rates amid frequent denunciations by Recep Tayyip Erdogan, prime minister, of an ill-defined “interest rate lobby” that he says is trying to hold Turkey’s growth back.

        However, Turkey is reliant on short-term capital inflows to underwrite more than 80 per cent of its current account deficit of more than $60bn.

        “The lira’s underperformance will make it harder for the central bank to keep its explicit commitment not to hike rates since defending the currency through selling foreign exchange alone is unlikely to be effective,” added Ilker Domac of Citigroup in a note.

        The government attributes its current predicament to a plot. “This dirty game, this operation and these traps are intended to affect [next year’s] local and presidential elections by breaking the bonds of love with our nation,” said Bekir Bozdag, deputy prime minister, on Friday, referring to the corruption investigation. “The [ruling] AK party and the government has its head held high – and will continue on its way.”

        It has responded to the arrest of more than 50 people in the anti-corruption probe by transferring police officers involved in the investigation, as well as other moves to consolidate its control. On Friday, a high-ranking official at the finance ministry’s financial crimes post was removed from his post.

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        The sale was also disclosed of Sabah-ATV, a media group that includes a leading pro-government newspaper, to an entity earned by the Kalyon group, a construction group involved in the redevelopment of Istanbul’s central Taksim square, the focus of protests against Mr Erdogan’s government in the summer.

        Turkish media have been widely criticised for an ownership structure that leaves many prominent outlets in the hands of companies dependent on government business.

        In what was widely interpreted as a further move towards consolidating government influence over the media, the head of the news division of TRT, the state broadcaster, was also removed from his post.

        “Right now, Turkey sticks out like a sore thumb,” said Nicholas Spiro of Spiro Sovereign Strategy.

        “While Turkey remains one of the most vulnerable EMs [emerging markets] to a rise in US Treasury yields, it has also become one of the riskiest politically. These two weaknesses are feeding off each other right now – but it’s the latter which dominates.”

        Funds targeted to beat inflation

        Posted on 20 December 2013 by

        Old Mutual plans three new multi-asset products for launch in February 2014 with target returns based on inflation.

        Dubbed the Foundation funds, the portfolios will be co-managed by John Ventre, head of multi-asset, and head of UK equities Richard Buxton, who was poached from Schroders this year, alongside fixed income investment director Stewart Cowley and head of alternatives Paul Simpson.

          The products are expected to be called Foundation 3, Foundation 4 and Foundation 5, with the numbers reflecting the percentage returns above inflation that each fund will target. They may invest in equities, bonds, cash, funds and derivatives.

          The company has also launched an offshore version of Mr Buxton’s popular UK Alpha fund.

          Woodford set for fast-track switch

          Posted on 20 December 2013 by

          Neil Woodford©Shaun Curry

          Neil Woodford is leaving Invesco after 25 years

          Star fund manager Neil Woodford is preparing the ground for a quick new fund launch when he leaves Invesco Perpetual next April, by setting up his new venture under the auspices of Oakley Capital.

          Oakley said Mr Woodford would use its infrastructure to help set up his own investment boutique.

            Sheltering under the Oakley umbrella should enable Mr Woodford to avoid the long regulatory process of establishing a new asset management business and enable him to launch a new fund very soon after leaving Invesco, said Mark Dampier, head of funds research at Hargreaves Lansdown.

            Mr Woodford announced his departure from Invesco Perpetual in October, saying he wanted to set up a new venture “based on my views about where I see long-term opportunities in the fund management industry”.

            Keith Ashworth-Lord, who runs a small value investing fund based in Manchester, uses a similar arrangement with a larger asset management company. “It massively de-risks the whole business and saves a huge amount of time,” he said.

            Mr Dampier added that Invesco should consider allowing in-specie transfers of holdings from Invesco to any new Woodford product. “Otherwise, Mark Barnett [Mr Woodford’s successor at Invesco] could find himself selling shares to fund redemptions, only for Neil Woodford to then buy the same shares for his new fund.” About £2bn has flowed out of Mr Woodford’s funds since he announced his departure.

            However, others said it was extremely unlikely that Invesco would consider such an arrangement.

            In-specie transfers were allowed when Patrick Evershed left Rathbones to go to New Star in 2002, pointed out another fund analyst. But this was a much smaller fund than the Invesco products, which have over £30bn under management between them.

            Baosteel: rate wall of China

            Posted on 20 December 2013 by

            Labourer works at cold-rolling mill of Wuhan Iron & Steel Group on outskirts of Wuhan

            Little fuss has been made over the first US dollar bond from Baosteel, China’s biggest listed steelmaker, sold this month. One of the best steel company credits in the world, Baosteel still paid close to 4 per cent to borrow $500m with its Hong Kong issue. But the bond will be priced off US Treasuries, not China’s local interest rates – and that may be worth its weight in gold to Baosteel, even in a time of Federal Reserve tapering. Even good Chinese companies face a tougher interest-rate environment and higher capital costs in 2014. This is worth fussing over.

            Few would have expected 2013 to be a year in which China’s central bank raised interest rates by 75 bps, despite one of the biggest slowdowns in the country’s economic growth for some time (to a mere 7.5 per cent). The People’s Bank of China was more concerned with irrepressible growth in broad money, which is likely to rise 15 per cent this year, above the PBOC’s target.

              Of course, the reddest flag might seem to be waving in short-term credit markets. Shanghai’s stock market shed 5 per cent this week, and fell nine days in a row for the first time since 1994, after the seven-day repo rate (the best measure of short-term interbank liquidity) spiked past 7 per cent. The PBOC is tightening here, too, much as it did in June. But both episodes were salved with central bank liquidity, once a lesson was taught to banks to lend carefully.

              Moves by the PBOC slowly to liberalise interest rates will be harder to put back into their box. These include the introduction of certificates of deposit in interbank lending, which track three-month Shibor, a more market-determined benchmark that rose by 1.5 percentage points in 2013. This will feed through to corporate loans, while corporate bond pricing will also factor in a doubling in bill financing rates (to 8 per cent) in 2013, according to Bank of America Merrill Lynch.

              “It is not that there is no money, but the money has been put in the wrong place,” as state media said of the PBOC’s June tightening. There is a lot of that money in Chinese companies: they have an average debt-to-equity ratio of 110 per cent, according to the IMF. The ratio in India is 80 per cent. So welcome, at last, to market-priced credit risk in China. More Chinese companies could follow the lead of Baosteel and issue in US dollars. But for those who cannot, strap in: it is going to be a bumpy 2014.

              Email the Lex team in confidence at lex@ft.com

              China ETFs lead new launches in 2013

              Posted on 20 December 2013 by

              Exchange traded funds linked to the Chinese stock exchange were among the hottest new product launches of 2013, in a remarkable repeat of the previous year.

              Observers could certainly be forgiven for feeling a sense of “déjà vu all over again” as new ETFs tracking the performance of the CSI 300 index (the 300 largest issuers on the Shanghai and Shenzhen bourses) attracted billions of dollars in inflows, just as the 2012 vintage of launches did.

                ChinaAMC debuted the fastest-growing launch of 2013, with its CSI 300 Index ETF grabbing inflows of $3.3bn in the first eleven months of the year, according to ETFGI, a consultancy.

                In 2012, ChinaAMC brought a Hong Kong-listed ETF tracking the same benchmark that managed to gather almost $2.3bn in less than 6 months, following its launch in July.

                China Southern Asset Management and E Fund Management also brought out ETFs tracking the CSI 300 index. They attracted inflows of $398m and $874m respectively between January and November.

                China Southern also scored a notable success with a new ETF tracking a broader benchmark, the CSI 500 index, which grabbed $630m. China Guangfa Bank attracted $554m to its offering tracking the same index.

                New exchange traded notes linked to asset markets in Israel were also prominent among 2013’s fastest-growing launches.

                Tachlit Trackers launched a money market that attracted 823m in new inflows between January and November. Tachlit Trackers, a joint venture between the Michael Davis group and DS Apex Holdings, two high-profile participants in Israel’s capital markets, currently manages around $8bn.

                Harel, one of the largest insurance and finance groups in Israel, gathered $356m for a new money market fund ETF. A rival product issued by Excellence Investment attracted inflows of $540m. Excellence, which manages around $75bn, is majority owned by Phoenix, one of Israel’s largest insurance companies.

                Other successful product launches included bond ETFs linked to specific areas of fixed-income markets.

                Deutsche Asset and Wealth Management pulled in $477m for an ETF tracking an index linked to the bonds issued by the 5 highest-yielding eurozone countries with a remaining maturity between one and three years.

                BMO, the North American provider, managed to attract inflows of $393m to an ETF providing access to US investment-grade corporate bonds with an outstanding maturity of five to 10 years.

                Blackstone and State Street Global Advisors teamed up to offer the first actively managed senior loan ETF, which pulled in 572m. The alliance provided more evidence of alternative investment managers’ growing interest in the ETF market.

                Vanguard, the world’s third-largest ETF provider, has gathered more than $700m for its Total International Bond ETF, a product it has been pushing as a solution to the likely ending of the 30-year bull market for bonds.

                Speaking at a recent investment symposium in London, John Velis, a senior investment analyst at Vanguard, cautioned investors against the temptation of strategies such as shortening duration of increasing credit risk to boost returns.

                Mr Velis said in the future fixed-income returns would be lower than those seen historically, but investors should remember that the enduring role of bonds in a portfolio was to provide diversification, risk control and stability.

                Diversifying across fixed-income markets in an international bond portfolio was a solution that investors worried about rising interest rates should consider, he said.

                Eeyore spirits hang over stock rally

                Posted on 20 December 2013 by

                At the end of any other year, equity investors would be whooping with joy. Shares have rallied strongly in the advanced world. Without great market drama, the US Federal Reserve this week started unwinding economic stimulus actions launched at the height of the global financial crisis.

                Yet as 2013 draws to a close, the rally looks distinctly unloved. Trading volumes remain low, investors are wary about weak corporate earnings growth, and companies are acting defensively. If animal spirits are at large, they are those of Eeyore. “It is one of the least joyous rallies ever,” says Derek Bandeen, global head of equities at Citigroup.

                Investors fret about bubbles

                Investors fret about bubblesEquities rally goes global

                  Share prices surged on the back of expanded “quantitative easing” – by the Bank of Japan as well as the Fed – which deliberately drove investors into riskier assets. The US S&P 500 hit a fresh record high after the Fed’s announcement on Wednesday, and is up 27 per cent per cent year-to-date. Emerging market stocks have fallen, but the European DJ Stoxx 600 is on course to end the year up 15 per cent.

                  With the Fed planning to wind down its asset purchases in 2014, other forces may be needed to sustain the rally, however.

                  “Nobody wants the rally to continue to be unloved or questioned all the time. They want to feel it has some basis,” says Stephanie Flanders, chief market strategist for Europe at JPMorgan Asset Management. “You want to see good news on the supply side of economies like the US’s – that is faster growth and no signs of worrying inflation.”

                  Affection for equities has not been helped by longer term demographic and regulatory changes favouring bond markets. Even as flows into equities have picked up this year, investors have preferred shares with bond-like characteristics – such as solid dividend payouts – and shied away from the biggest, most global companies. A portfolio based on the world’s 50 largest companies would have risen only about 30 per cent over the past decade, while the rest of the market has risen 130 per cent, according to calculations by Citigroup.

                  “There is a distrust of size which is very different to what we saw in the 1990s, when there was . . . a belief in economies of scale and globalisation,” says Mr Bandeen. “There is really a lack of confidence in terms of looking for growth and allowing companies to take advantage of their size.”

                  Globally, the volume of initial public offerings remains well below pre-crisis peaks. By contrast, share buybacks have surged; US companies are spending more on buying back their own shares than at any time since 2008, according to data this week.

                  There is really a lack of confidence in terms of looking for growth and allowing companies to take advantage of their size

                  – Derek Bandeen, Citigroup

                  But scepticism about the rally stems mostly from the lacklustre corporate earnings growth, especially in Europe. Instead, prices have risen on higher valuations – helped in European markets by the easing of the eurozone debt crisis after Mario Draghi, European Central Bank president, in July 2012 pledged “whatever it takes” to save the continent’s monetary union. Google searches for the phrase “stock market bubble” have reached levels not seen since 2007 – before share prices slumped globally, according to research by BlackRock.

                  “Investors have picked up on the confusion and complexity of the world of QE,” says Mark Cliffe, chief economist at ING. “It is not just banks building up [financial] buffers, but also companies and households. The danger is that as everyone tries to make the system safer, it gets less safe. If there is no investment, where is the growth going to come from?

                  That does not mean the rally is immediately doomed. Central bank quantitative easing will remain a powerful force into 2014, and the supply of equities constrained. “This is what happens in a bull market – valuations rise a lot more than profits,” argues Ewen Cameron Watt, chief investment strategist of the BlackRock Investment Institute. “’Unloved’ is not necessarily the right adjective. It is more that it [the rally] is lopsided.”

                  But there are limits, says Mr Cameron Watt. “Another year of high returns driven by higher value expectations rather than profits would leave you in the top quartile of valuations relative to history, which is when risks would start to set in.”

                  An optimistic view is that the rally becomes self-sustaining as investor and economic confidence builds. A more pessimistic view is that a pick-up in corporate profitability is far from assured.

                  “There is a vast amount of hope driving this,” says Andrew Parry, chief executive of Hermes Sourcecap. “I want to see earnings growth coming through. I fret about capital investment. Share buybacks are all well and good but you can’t keep buying back your shares to get earnings growth . . . you’re not investing and not creating long-term value.”

                  Still, Eeyore is not alone in his aversion to exuberance. “The last time a market rally was loved was in June 2007,” warns Mr Parry. “When everyone is optimistic and understands why markets are going up, that is the time to worry.”

                  Letter from Lex: Facebook and fun e-money

                  Posted on 20 December 2013 by

                  The Chinese government does not like Bitcoin. First, the People’s Bank of China stopped financial institutions from handling it. Now, this week, the central bank effectively stopped Chinese citizens from turning their renminbi into it. The latest Chinese move – which more or less bans new deposits at BTC China, the world’s biggest Bitcoin exchange by volume – sent the price of one Bitcoin outside China down by a third, below $500 after a 900 per cent run-up this year to above $1,200 at the end of November. This sounds like a bubble popped by the ultimate test of government hostility: China’s determination to control the amount of capital that can leave its borders. But investors should like Facebook even though founder Mark Zuckerberg is selling 41m shares. (He will keep a majority of the voting interest.) Shares have doubled this year on the basis of revenue growth that has shocked and delighted Wall Street. But at some point, perhaps even next year, the $120bn company’s growth will let up; but when this happens, Facebook’s amazing profitability will remain.

                  In banking, the EU’s proposed banking union is not having an easy birth. The latest deal outlines how failing eurozone banks will be dealt with. There will eventually be a €55bn resolution fund, use of which will be decided by a cast of well over 100 people, a system that is far from ideal. When a bank needs rescuing, a small group acting decisively is better than a collection of politicians, bureaucrats and regulators all trying to have their say. Meanwhile, after leaving Barclays under a cloud in July 2012, Bob Diamond has re-emerged with a $325m cash shell that is floating in London. African banks, especially those involved in business lending, are likely to be the targets. There are reasons to be wary – the structure of the vehicle. A lot of equity issuance could be on the way. But opportunities in banking are few and far between and there are worse places to start than Mr Diamond.

                    For M&A, it is far from clear that the rumoured tie-ups of Sprint and T-Mobile or Charter and Time Warner Cable would, at this stage, solve more operational problems than they would create. T-Mobile’s controlling shareholder, Deutsche Telekom, may want out of the US market. And a TWC buyout would save its shareholders from suffering though a turnround. The SoftBank and Charter bosses, for better or worse, love dealmaking. But shareholders in any potential acquirer might not share their enthusiasm, or their patience. Investors were enthusiastic about Avago’s deal to buy LSI for $6.6bn, sending the buyer’s shares up. There is a simple reason why: it will be very accretive to Avago’s earnings. But it is worth sorting out why. The most important reason has a name: Ben Bernanke. The previously debtless Avago will assume $4.6bn in debt in doing the deal, but it thinks the interest level on the debt will be just 3.6 per cent – a gift of the Fed’s easy money policies.

                    Corruption concerns hit Turkish lira

                    Posted on 20 December 2013 by

                    The Turkish lira fell to a new low against the dollar as corruption investigations in the country underlined fears that political risk along with Federal Reserve tapering is likely to be a major contributor to emerging market volatility in the coming months.

                    Turkey’s prime minister Recep Tayyip Erdogan faces one of his most serious challenges since taking power over a decade ago after four of his ministers and a host of other figures connected to the government were detained for questioning on Friday.

                      The dollar climbed to a record high against the lira of TL2.0950, surpassing the previous peak in September at the height of the “taper tantrum”, when many emerging markets felt the weight of investor concern that a reduction in stimulus would disrupt the flow of cheap money into EM assets.

                      Tapering became reality this week as the Fed trimmed its $85bn-a-month asset purchase scheme on Wednesday by $10bn a month, and although the reaction in equity and bond markets was muted, many EM currencies had sharper falls.

                      Turkey, which has a large current account deficit – primarily underwritten by portfolio flows and short-term, private and public sector foreign exchange debt – is one of the countries believed by analysts to be most at risk of currency depreciation as the Fed continues to taper in 2014.

                      Over the week, as the lira settled at about TL2.0909 against the dollar, its losses extended to 2.6 per cent for the five sessions.

                      Other currencies that were among the weakest during the summer bout of EM volatility included the Indian rupee, which held up well this week, climbing 0.2 per cent against the dollar to Rs62.04 as foreign fund flows increased thanks to its reduction in its current account deficit.

                      Indonesia’s rupiah, however, came under pressure. It fell 0.9 per cent over the week to Rp12,200, while the South African rand lost 1.6 per cent to R10.4510 and the Brazilian real shed 2.1 per cent to R$2.3785.

                      Outside of the emerging markets, both the euro and the Japanese yen fell against the dollar over the week,: the euro was down 0.6 per cent to $1.3653 and the yen fell 1.2 per cent to Y104.46.

                      But sterling inched higher as the signs of life in the UK economy continued this week, with a sharp fall in unemployment, higher retail sales and confirmation on Friday of 0.8 per cent growth in the third quarter.

                      The pound rose 0.3 per cent over the week to $1.6345 against the dollar and was 1 per cent higher versus the euro at £0.8349.