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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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Currencies

Rand gains from calmer EM waters

Posted on March 26, 2014

    The South African Reserve Bank on Thursday will deliver its latest monetary policy decision.

    Analysts’ consensus is for the SARB to leave rates alone after unexpectedly hiking them by 50 basis points to 5.5 per cent in January, ostensibly to support the rand.

    Still, Capital Economics describes the outcome as a close call.

    “A renewed slump in the currency before the meeting could prompt another rate hike but, as things stand, we think the SARB will refrain from raising rates this time around,” says the London-based research boutique.

    After being caught up in the emerging market fallout at the start of the year, with domestic industrial relations strife adding to the tension, the rand seems to have steadied for the time being, gaining 5 per cent or so since the SARB’s January tightening.

    Chart: South African rand against the dollar

    And it is worth noting that EM currencies generally have not displayed the kind of sensitivity many would have expected to last week’s shift in short-term US rate expectations following the “Yellen wobble”.

    The rand’s one-month implied volatility is near 13, below the 12-month average of 14.3 and well down from the spike above 18 seen at the end of January.

    Calmer times in EM forex?