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The 2020 monetary market becomes unpredictable and less positive

Thursday 13, 02 2020
The Securities and Analysis Center of SSI Securities Company (SSI Research) has just published its monetary market report in February 2020.
The 2020 monetary market becomes unpredictable and less positive

The epidemic is a big and unexpected event, resulting in other events such as US-Iran tensions, US-China agreement on January 15, Brexit on January 31, January Fed meeting, etc. any many more.

The monetary market report

The Securities and Analysis Center of SSI Securities Company (SSI Research) has just published its monetary market report in February 2020.

The report said the first-phase agreement between the US and China was considered the most anticipated event in January and could have extended the positive sentiment of December 2019 if it were not interfered with by 2 major events. One was the US-Iran conflict that suddenly broke out and the other was the Corona pandemic. Investor sentiment fluctuated continuously and was shown most clearly by fluctuations of the JPY. This currency created a bottom in mid-January, as well as a top at the beginning and the end of the month, with the gap between the top and the bottom is up to 1.92%.

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The impacts caused by China

The 2020 monetary market becomes unpredictable and less positive

China's critical position in the global supply chain makes the total economic losses due to the nCoV epidemic much larger than the 40-billion-dollar losses caused by the SARS in 2003. The epidemic is a big and unexpected event, resulting in other events such as US-Iran tensions, US-China agreement on January 15, Brexit on January 31, January Fed meeting, etc. and many more. The financial market in 2020 is becoming unpredictable and much less positive than the predictions made at the end of 2019.

This is also a blow to the Chinese economy which is currently having many instabilities. The easing policies of the PBoC will continue to be expanded at a stronger rate than in the past 18 months to revive the economy. In fact, in January and the first days of February, the PBoC continuously pumped money in the open market and lowered the interest rate for 10-point tenor (bps). The CNY yuan for the whole month recovered to below 7.0 but the pressure of CNY depreciation in the coming time remained high.

DXY index returned to the zone of 98, except for JPY and CHF. Most currencies depreciated against the USD in January, of which the strongest was THB. The currency appreciated by 8% in 2019 - the strongest price increase in Asia and ranked 2nd globally (after Russia). Right from the beginning of the year, the Central Bank of Thailand (BoT) announced that it would take measures to curb the rise of the THB, resonating with it as an epidemic causing the key economic sector of Thailand's tourism to be heavily damaged. The THB decreased by 4.94% in January only. Among the top 3 currencies with the strongest decreases in January, there were Korean KWR (-3.46% YTD) and Russian RUB (-3.25% YTD) also due to the impact of the epidemic causing trade disruptions and lower oil prices.

At present, in mid-February, disease outbreaks are still the focus of the impact on the international market. According to SSI Research, positive factors such as the US economic index, the relaxation of central banks or the improvement of US-China relations may have certain effects but when the epidemic has not shown signs of being under control, the risk of volatility in financial markets is still very high.

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