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Related blogs to Otaviano Canuto

Why a Weaker Dollar Might Be Good for Emerging Markets?

Otaviano Canuto | Posted : December 22, 2020

After reaching a peak against other currencies in March this year, the dollar fell by almost 15% until the beginning of December. According to Bloomberg, asset portfolio managers have been assuming "short" positions against the dollar, that is, betting on its fall ahead. The dollar is expected to devalue against the euro, the yen, and the Chinese RMB in 2021.

The Pandemic Will Reshape Globalization

Otaviano Canuto | Posted : December 07, 2020

The pandemic is accelerating history, in the sense that it is leading to the speeding up of some recent trends. In the case of globalization, the pandemic will not reverse it, but it will reshape it. Here we take a bird’s eye view of global trade during the pandemic, relate it to previous trends, and guess how global value chain managers and government trade policymakers are likely to react.

Middle-Income Countries Should not be Rushed to Graduate

Otaviano Canuto | Posted : December 14, 2020

This article has originally been published on OECD Development matter platform

Many donor countries seem eager to see middle-income countries (MICs) “master out” and graduate to a non-client status in multilateral development institutions before fully achieving their development potential. We argue that such institutions can still significantly contribute to the sustainable development of MICs, while also seizing many benefits from this relationship (Middle income countries and multilateral development banks: traps on the way to graduation).  

The two sides of capital flows to Brazil

Otaviano Canuto | Posted : December 01, 2020

There was a significant inflow of funds in Brazil's external financial account in October and November for investments in both stocks and fixed income instruments. The bulk of the recent inflow has come in a “passive” way, and it did not include considerable volume on the side of “active” investors. For the wave to unfold in the availability of external resources to finance investments in the country, progress and confidence in the domestic fiscal and regulatory agenda will be relevant.

Quantitative Easing in Emerging Market Economies

Otaviano Canuto | Posted : November 19, 2020

 “This time was different” in terms of the monetary policy responses to capital outflow shocks felt by emerging market economies (EMEs), as pointed out by a November 12 Bank for International Settlements bulletin. The pandemic-related global financial shock that hit in March and April led to close to $100 billion leaving EMEs (see my previous article). This was answered by local monetary authorities in ways different from previous episodes.

This time there was even the use of quantitative easing (QE) in some EMEs. That is, the expansion of the central bank balance sheet via acquisition of public or private securities as an additional monetary-financial management tool. Such asset purchase programs may either aim at simply stabilizing asset markets or easing financial conditions (with the term ‘easing’ becoming more applicable in the latter case).

Whither Interest Rates in Advanced Economies: Low for Long?

Otaviano Canuto | Posted : October 23, 2020

We have previously discussed how, between March 2020, when the financial shock caused by COVID-19 occurred, and the end of August, the stock and corporate debt markets in the United States performed extraordinarily, despite gloomy prospects on the real side of the economy. The decline in technology stock prices in September ended up taking the equivalent of a month from gains starting in April, but prices remain high.

China on the way back to rebalancing

Otaviano Canuto | Posted : September 28, 2020

CGTN, 25 September 2020

China’s economy keeps recovering from the coronavirus pandemic-led crisis through the third quarter of 2020, as revealed by the numbers of August activity. Its GDP grew by 3.2% in the second quarter, after falling by 6.8% in the first quarter, in both cases as compared from a year before. It is now the only major economy expected to exhibit growth this year. Successful containment of the pandemics has allowed it to be first-in-first-out relative to others.

Dependency and disconnect of U.S. financial markets

Otaviano Canuto | Posted : September 22, 2020

U.S. stock and corporate bond markets performed extraordinarily well from the March financial shock caused by covid-19 to the end of last month. Then, three consecutive weeks of decline in the three major stock market indexes have been followed this week by a global slump attributed to fears of new lockdowns. A period of disconnect of financial markets with the underlying real economy has culminated in a revelation of the former’s high dependency to Federal Reserve policies.

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