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Emerging Currencies Continue Fall

emerging currenciesEmerging-market currencies are continuing to decline which is good news for most countries seeking to infuse competitiveness into their respective economies.

As a result of the fast sell-off, governments are disregarding the hands-off approach fearing these conditions will give rise to inflation, dissuade foreign investments and drag down their economies with the deceleration of global growth. Policy makers from countries like Turkey, Mexico and South Africa opted for intervention, augmented interest rates and stopped monetary easing.

According to Morgan Stanley, more policy makers will be compelled to act while Goldman Sachs Group said weakness of currencies in developing nations. In fact, 20 of the 24 widely-traded currencies weakened during the past month. The index of their exchange rates declined eight percent in 2015 to the lowest since 1993.

Meanwhile, currencies of Russia, Brazil, Chile, and Colombia were the foremost losers since the middle of May. Each not fell over 10 percent. The Hong Kong currency went down only 0.02 percent because of its peg to the US dollar.

Declines extended last week when the ruble plunged three percent following a cut in interest rates. Russia suspended US dollar buying to build up its reserves following a rout in its currency.

Thailand’s baht dropped to a six-year low while South Africa’s rand slumped to its lowest in more than 10 years.

The central bank of Mexico already expanded its intervention agenda which quadrupled daily US dollar sales to a high of $200 million. Brazil’s real incurred a 21 percent decline as the central bank raised its key rate to 14.25 percent which is the highest among principal economies. Central banks across the African region are also boosting interest rates aggressively to help prevent currency routs.

The main culprit is said to be the US Fed as news that interest rates will rise soon attracted more investors from different parts of the world. Increased yields in the US will lead to riskier assets which will be less attractive in emerging economies.

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UPDATE 1-Drugmaker Regeneron's profit beats as Eylea sales jump

Aug 4 (Reuters) – Regeneron Pharmaceuticals Inc reported a better-than-expected quarterly profit due to strong demand for its blockbuster eye drug, Eylea.

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Fertilizer maker Mosaic's Q2 profit rises 57 pct

Aug 4 (Reuters) – U.S. fertilizer company Mosaic Co reported a 57 percent rise in quarterly profit, helped by strong phosphates sales, improved potash prices and lower costs.

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FedEx & Others Airlines Want American, Delta and United Airlines To Just Shut Up And Compete

Overnight package delivery giant FedEx Express has a warning for the U.S. government if it is even half-way serious about capping the access to the U.S. market of the three Persian Gulf airlines who’ve been the target of allegations that they’re competing unfairly.

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UPDATE 3-Credit Agricole shares dive 10 pct as early overhaul ruled out

* Held talks on structural change with ECB but faced ‘constraints’

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RBA Expected to Maintain Rates

Reserve Bank of AustraliaAnalysts believe the Reserve Bank of Australia (RBA) will keep cash rates in abeyance at 2 percent when the board holds its policy meeting today. Traders are now awaiting the statement of Governor Glenn Stevens.

The RBA cut rates (1/4 percentage point) last May after a similar reduction in February following 18 months of maintaining rates. Notwithstanding erratic economic data, the central bank is not inclined to implement a third cutback partly because of the excited property market in Sydney and household debts well as doubts regarding lower rates at this point.

The AUD is trading neat fair value, employment stabilized, and investments have picked up.
Nonetheless, growth rates will probably remain below the trend for the near future, according to some economists.

In his recent pronouncement, Stevens suggested assumptions about economic growth to spur employment may require downward revision.

The most recent business survey conducted by National Australia Bank and labor force reports were more robust as projected but retail sales figures were not encouraging while consumer sentiments dropped.

There are predictions of a third interest rate cut this November because of more difficult lending conditions for certain housing market segments.

The head economist from Bank of America (Merrill Lynch) suggested that the RBA’s inclination to maintain rates will grow slowly but surely and allow it to keep cash rates on hold for an extended duration.

According to the chief economist (Bill Evans) of WESTPAC, the easing bias of the RBA is aimed at undermining the AUD rather than go for another rate cut.

The Australian currency remains overvalued despite its depreciation of 20 percent against the USD in the same period of last year.

At US73¢cents, the AUD has not decreased enough for the RBA governor to ditch a successful strategy.

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Tyson Foods warns full-year profit may fall short of forecast

Aug 3 (Reuters) – Tyson Foods Inc, the biggest U.S. meat processor, warned it may not be able to achieve its profit forecast for the year ending September due to export disruptions in its beef…

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Britain's FTSE underperforms, mining shares a drag

* Financial tech company Fidessa slumps (Adds PMI data, updates prices)

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Rolls-Royce shares rise as activist stake fuels turnaround talk

LONDON, Aug 3 (Reuters) – Shares in British engineering company Rolls-Royce, under pressure after a run of profit warnings, rose for a second session on Monday on speculation it could speed up…

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UPDATE 1-Intertek shares leap after underlying revenue growth improves

LONDON, Aug 3 (Reuters) – Shares in British product-testing firm Intertek Group jumped by 9 percent to their highest level since May after it posted an improvement in first-half underlying revenue…

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BUZZ-Merlin Entertainments: CS cut pulls brake on stock recovery

** Merlin Entertainments down c.2.3 pct & among top FTSE-100 losers after Credit Suisse cuts TP on lower FY guidance after accident at Alton Towers theme park in June

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Chinese Markets Ripped On Misguided US Fed Policy Stance

Chinese markets were down almost 9% today as worries about a September hike in US interest rates, the Fed meeting this week, growing concern about their own economy slowing down thanks to Fridays PMI data there and profit-taking led to the worst one day decline in over 8 years.

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