【英文】汇丰银行报告：全球外汇展望Currency Outlook：New thinking for fiscal loosening（54页）

英文研究报告 2019年08月22日 08:32 管理员

The three scenarios above have all been positive for the currency in question – even if only marginally. The final scenario we discuss, where loose fiscal policy is accompanied by loose monetary policy, should have a negative currency impact, in theory. This would often be the start of a slippery slope for a currency, for a host of well-worn reasons: potentially higher inflation eroding the value of the currency; likely bond sales by foreign investors causing FX weakness; increased economic imbalances – both in terms of domestic asset bubbles, and externally from a trade perspective; and concerns around monetary policy independence. This negative relationship has held for some currencies in the recent past.

The combined fiscal and monetary expansion in Hungary in 2017-2018 helped to fuel a near 10% move higher in EUR-HUF. The TRY’s struggles in 2018 might have been catalysed by geopolitical developments, but also came against a backdrop of loose policy on both fronts, at a time of high inflation. Italy has also faced challenges when talking of fiscal loosening although this might reflect market concerns about the potential currency mismatch of issuing debt in EUR. In any case, the FX impact of possible fiscal indiscretion in Italy has been fleeting at best. Indeed we are seeing signs that the traditional relationship appears to be breaking down, meaning currencies have been able to withstand this cocktail of loose policies. The most obvious example is South Africa, in our view. South Africa’s fiscal position has been loosening markedly for the last three years and expectations are that this deterioration is only going to continue (Chart 7). This may not be a fiscal loosening in the same sense as seen in the US or Poland. Most of the widening of South Africa’s deficit is a function of poor growth limiting revenue gains and an increasing requirement to provide support to state-owned enterprises (see New Eskom bailout deepens fiscal risks, 25 July 2019). On top of this fiscal loosening, monetary policy has also recently turned more dovish with the SARB delivering a 25bp cut in July and signals of further easing to come.