May 29th, 2008

Hu Jintao met with Wu Poh-hsiung, chairman of the KMT



Moodys said that high c/a deficits and rapid credit growth hurting Eastern Europe, mainly HUF, Lithuania, and Latvia

- 11 countries currently in the "danger" zone, including Iceland

- Romania, Poland, Croatia could face medium landings

- Iceland, Estonia, Bulgaria, Kazakh, and Czech all strong

- Romania and Hungary could have trouble refi their debt due to low investor bases



South Africa

April at 12.4% vs 11.9% in March; more speculation of greater than 50bp in 12Jun

Mboweni said as much as 200bp possible; "we need to move very strongly now. Drastic situations require drastic measures"

- "you dont have to be a genius to tell that interest rates have to tighten"

- said post-Mbeki administration woul dlikely retain inflation targeting

- "a central bank that misses its target for a long time loses its credibility. a central bank has to tighten in that case"

- should be in line with trading partners like EU if we "want to be in the big leagues"

Eskom said would be comofrotable with "phased adjustments" to electricity tariffs

- said power shortages will go on for years

- proposal to double prices over 2 years, facing opposition from ANC and labor allies => will hurt poor

Does higher rates help or hurt ZAR

- short term is positive for currency

- medium term equities will hold more weight

- relying on higher rates to attract capital means will be much more sensitive to market sentiment and swings

levels: 7.6194 20day; 7.6304 30day, 7.6616 100day, 7.6210 50% fib, 7.5820 38.2% fib





Vietnam

Debt rating lowered from stable to negative, and affirmed BB- long term currency rating

Govt said "too negative", unhappy with outlook change

- "we will accept slower growth with fighting inflation a priority now. They should give govt credit for its efforts"

USD denominated loans account for about 1/4 of outstanding loans, fall in dong make repayment more expensive

Main stock mkt "Ho Chi Minh City Stock exchange" closed on 27May from 'technical problems' will repoen tomorrow, had declined 16 straight days before closure



Thailand

THB fell to lowest as energy costs will widen trade deficit and slow growth

Govt aims to cap inflation at 5% in '08, was up 6.2% in April, highest since '05

Trade deficit in April was widest in 12 years as Thailand imports all of its oil



Russia

CB may allow RUB to rise as much as 1% against ccy basket to curb inflation

Bank said on 14May would inject volatility with small, unpublicized interventions to deter speculators



Iceland

CB may raise rates past record 15.5% after slump in Krona fed through to inflation faster than expected

- soared to 12.3% in May, highest in 18years

- very clear inflation will exceed banks 10.7% and 9.9% forecasts for 3rd and 4th qtr

- CB forecast -2.5% and -1.5% contractions in '09 and '10

- inflation has exceeded banks 2.5% target every month since april '04

- international market turmoil makes financing a c/a deficit more difficult

May 28th, 2008

KRW: BoK sold about 500usd to push spot to 1033, also commented that high inflation a top concern for them, could see 1025
MYR: Good Q1 GDP numbers

Hong Kong
Deficit narrowed exports and imports rose, but exports very high on back of china demand
April inflation surprise at 5.4% vs 4.2% mktexp, food prices main driver and pegging of HKD to USD did little to buffer inflation

South Africa
Inflation at 10.4%, highest in 5 years; CPIX which exlcudes mortgage costs up 10.1%
Headline inflation including mtg costs up to 11.1% from 10.6% in March
levels: 7.6539 100 day, 7.6372, 30 day

Vietnam

May 27th, 2008

KRW: BoK sold 800mio USD from 1050 to 0147, then another 500mio from 1045 to 1036, shift in MoFE tone as now concerned about inflation over growth
CNY: 1yr NDF up 500pip from 6.48 to 6.53

Vietnam
- ref rate moved from 1,044 on 23May to 16,051 on 26May to 16,060 on 27May (trading to 16,212..can trade 1% on either side)
- USD demand increasing from Vietnam's highest inflation since '92
- CPI jumped to 25.2% in May yoy (21.4% in April)
- Food costs have been primary culprit with int'l prices of rice up 67.8% in May yoy, and 22.2% mom
- PM Dung said State Bank will continue fighting inflation

South Africa
- grew at slowest pace in 6 years with annualized 2.1% in Q1, down from 5.3% (mktexp of 2.6%)
- consumer side will remain under pressure with rate hikes while power problems will also feed a cylical downturn
- big impact in mining came from cuts in electricity while production at diamond and platinum mines lower from flooding
- higher electricity, higher rates, and US recession hurting chances of govt goal to cut unemployment to 14% from 23% by 2010
- growth probably down to 2.9% in '08, from 5.1% in '07 (lower than govt forecast of 4%)
- CPI tomorrow expected at 10.0% from 10.1% in March, debate now on 12Jun whether they raise 50bp or 100bp
- analysts expect CPI to average 7.8% this year, up from 5.9% forecast for '08

May 22nd, 2008

CNY: Fell to multi-year lows at 6.9450; 3.7% in the last month
Fed statement: no longer appropriate for the statement to emphasize the downside risks to growth; members concerned about upside risks to inflation and commodity prices
- Fed on hold at 2%
Fed cut growth forecast for '08 to 0.3-1.2%, from 1.3-2%


Singapore
Moody's reported negative outlook on Sing REITs from weak property sentiment and tight liquidity conditions; a SGD negative
April CPI expected at 7.6% in Apr, up from 6.7% in March, SGD NEER would be allowed to hold in the upper end of the band
GDP expected at 7.2% y.y; full year prediction is 5.8%, top end of 4-6% govt forecast

South Africa
Eskom placed on review by Moodys, utility has been in the spotlight; Moody's concern being the allotted request on 06Jun will be much less than 53% hike that was requested
Moody's ignored the 5yr dilution plan regarding the original 53% tariff hike, which would improve stability perception
Credit downgrade would definitely trigger a selloff in the ZAR
Mboweni speech
- monetary policy facing the "strongest challenge" since inflation targeting adopted in 2000
- bank may need to take "further steps" to curb price growth
- forecasts will be outside target 3-6% range
- big issue now is wage demand and unit cost of labor
- FM Trevor Manuel in solidarity with Mboweni that cb shouldnt readjust band to allow more flexibility
- "but on the other hand, we talk and talk and talk, barking and barking all the time. A bit of biting is necessary"

Vietnam
Dong fell after cb set a reference rate of 16,037 from 16,029
PM Nguyen Tan Dung said nation needs to foxus on IR policy in fighting inflation
Economy expanded 7.4% in Q1, last year was 8.5% for the year, fastest since 1996
Inflation is 21.4% in April, fastest since 1992
Govtcalled for cb to closely monitor credit supply, specifically for securities trading and property investment
- last year credit growth was 50%, targeting 30%
- state bank said last month might widen from 1% to 2% but no target date

KRW: Spot gapped to 1052 and up to 1057 before BoK seen selling down to 1042
CNY: As EUR gapped higher, more selling interest in China
German IFO surprised to the upside pushing EUR up
In inflation data, government gasoline prices fell 4.6%
China: Shanghai composite fell from 6000 to 3000 from December to April
BoJ left rates unchanged at 0.5%
TWD: President Ma Ying-jeou was inaugurated as President of Taiwan on Tuesday
MYR: Badawi met with UMNO leaders to discuss Mahathirs resignation; no UMNO MPs left the part
Russia to meet with Georgia Envoy June 6-8 over Georgia's decision to join NATO
June 26-27 EU/Russia summit in Siberia

Vietnam
Ag Min Cao Duc Phat said might lift ban on rice exports in early July which may ease rice prices

Singapore
Market crashed through 1.3640 with market looking to EUR;

Thailand
Long liquidation as 32.00 broke triggering stops
BoT left rates unchanged
- signalled would tighten later if commodty-driven inflation doesnt subside
has kept rates steady 5 times since July '07 since five cuts
inflation ceiling is 3.5%
Indonesian were first CB to surpringly raise rates
FM Suebwonglee said he viewed stagflation as a greater threat than inflation
Annual inflation jumped to 6.2% in April '08 from 5.3% in March and 1.8% in Apr '07
BoT forecast inflation at 4-5% up from 2.3% in '07
Argument for stronger THB to buffer imported cost push inflation would be preferred to rate hikes as less collateral damage



South Africa
As ZAR was approaching Feb high of 7.39, violence and risk conditions hit ccy hard
As market gears up for a week of ZAR negative data should see a pullback to 7.75 before SARB issue comes back into play
While violence not a huge issue, symptomatic of larger issues of immigration = political instability
Other major political instability is Zuma's trial before 2009 elections
- SARBs inflation targeting will be under attack and rock investor confidence
South Africa has 48.5mm residents, and 3mm Zimbabwean and other African illegal inmigrants + 25% unemployment
Should trade in 7.63 - 7.73 range and need break of 7.58 for current long USDs to give up

Iceland
Moody's did affirm outlook as stable even with downgrade, just that iceland didnt deserve Aaa rating with "unusual circumstances"

May 20th, 2008

KRW: MoFE clarified that they wont carry out direct measures to curb short-term FX, the swaps firmed aggressively
TWD: First day of new administration, stocks 2.5% lower, spot at low of 30.46
MYR: 2nd FM Nor said economic fundamentals remain strong s mkts shouldn't be too concerned with Mahatir resigning from UMNO
- Mahatir said wont return to party until Abdullah has resigned


Thailand
Massive selling drove spot lower => offshore curve to come off
Chief Economist of BoT assured that "policy bias wont stifle growth"; April CPI t at a multi-year high
Any attempt to raise would be met with resistance, as govt still projecting 6% growth
Should play it safe and keep rates at 3.25%
Suspected CB intervention pushing THB higher; CB potentially trying to curb inflation via exchange rate

Singapore

South Africa
Mboweni's speech on Thursday
Next week GDP expecting low consumption growth, but even if slightly lower CPI, electricity tariff hike will boost price pressure
Expecting 50bp in June, aother 50 in August which would jack up rate to 12.5% in just 3 months
Luthuli House - home of Congress
Eskom CEO said main reason for 53% request was cost of raw materials, mainly cost of coal
Government has pledged about 60bn ZAR in assistance
FM Manuel defended inflation targeting as econ mgmt tool; and govt still wants 3-6% range
- "country with low savings, low reserves needs measured inflation"
- Union leaders suggesting food riots similar to other countries unless ANC scaps 14% VAT on essential food items
- would be difficult to use tax measures to deal with impact of higher food costs

15.03.2007Fitch Downgrades Iceland to A+ / AA+ Outlook Stable
On March 15, 2007 Fitch Ratings downgraded Iceland’s foreign and local currency Issuer Default ratings (IDRs) to A+ and AA+ from AA- (AA minus) and AAA respectively. The Outlook on both ratings is Stable. The Short-term foreign currency rating is also downgraded to F1 from F1+ and the Country Ceiling is lowered to AA- from AA.

http://www.xak.com/main/newsshow.asp?id=85219

Iceland's credit ratings were cut for the second time in less than two years by Standard & Poor's because the global credit crunch may cause its economy to shrink faster than anticipated. The country's long-term foreign-currency debt rating was lowered one step to A, five levels below the highest investment- grade rating, from A+, S&P said in a statement from London today. The ratings carry a negative outlook,
meaning they are more likely to be cut again than left unchanged or increased.

May 19th, 2008

US Consumer confidence much weaker than expected on Friday at 59.5 vs. 62.0 mktexp
Housing starts were up 8.2%, biggest month on month in 2 years
Goldman raised oil forecast to $141bb from $107 in 2H08 citing supply constraints

Hong Kong
Q1 GDP rose 7.1%, bot mktexp of 6.0%; govt said full year should be at higher end of 4-5% forecast
Forecast headline inflation at 3.4% for '08

Singapore
April NoDX huge surprise at 5.4% vs. 1.6% mktexp
- electronics and pharmaceuticals were down, but was petrochemical companies that saved the day
- despite emphasis on trade with US, was down 17% with US, but up 19% with China, now 2nd largest partner
- EU which is largest partner actually had first pickup in demand
Q1 GDP data oand April CPI on Friday 23May; good numbers should resume downward trend
- looking for 6.9% Q1 GDP (down from 7.2%) and looking for 7.2% CPI from food/energy
Main thing is despite strong SGD appreciation, did not affect Sing trade figures

South Africa
Lack of domestic data keeps international markets in focus; strong commodities sentiment will push towards 7.3900
Next week will bring Q1 GDP, CPIX, credit and trade data; should be ZAR negative
sell at 7.40 with a stop at 7.29 and 2-3 week target of 7.75
Still expecting 12Jun will see a 50bp hike
Eskom decision released on 06June, very close to MPC decision; friday NERSA begins the hearings on Eskom
- pressure from government, unions, and political parties => energy summit with NEDLAC ( National economic development & labor council) => utility agreeing to phase increases over 5 years in lieu of 52% increase
- will change one-time inflationary expectations, but create expectations of rising prices over extended time; less short-term, more long-term
Mboweni speech on monetary policy conference on Thursday
Report that Mathews Phosa, treasurer-general of ANC, reportedly asked Mbeki to resign and call early elections
100day MA = 7.5960; 7.4580 lower end of bollinger; 7.4540 0.0% fibonaci

Thailand
BoT Chief Economist Sripayak said CB wouldnt adopt policies to hurt economy, but stable rates effectively would be monetary easing
PM Samak said cabinet reshuffling would affect no more than 3 positions
Meeting on Wed; expect rates unchanged
- in Q1 the core reading at low end of 1.5-2.5% band; headline at 6.2% in April
Think 32.25 should provide strong support with political uncertainty and growth prospects

Vietnam
2001 to 2005 real GDP averaged 7.5%, got aims for 8.5% in '06 to '10
In '08 we may see growth to 5% yet inflation has jumped from 6.8% a year ago to 19.4% from credit/money growth and int'l prices
Dong wil appreciate in '08 as 1) need to reduce inflation 2) VND desire to promote foreign investment desite inflow of USD
US is only 5th largest investor in Vietnam, the Ministry of Planning and investment would like to increase the role
Tighter policy
- price controls on 'strategic products' like coal, steel
- reserve requirement raised to 11% from 10% before in Feb
- 30Jan rates raised at 100-150bp to 7.5%
- bank lending growth capped at 30% in '08 from 40% in '07
GS: State bank will rely on high IR and credit control to reduce domestic overheating, while maintaining fixed exchange rate with moderate downward crawl in '08 - '09
- hiked rates from 8.75% to 12%; commercial banks cannot offer savers rates above 150% of the bast rate
- discount rate at 11% from 6% and refinancing rate at 13% from 6%

Iceland
- Sweden, Norway, and Denmark each guaranteeing swaps up to 500mio EUR per for EUR/ISK swap
22May rate decision

May 15th, 2008

KRW: buying of 200 USD by polo at 1053, buy on dips around 1040; weaker won still favored to be boosted for exporters and oil companies need to buy USD/KRW for hedging

SGD

Saw MAS at 1.3850, still seeing support on the dips

Malaysia downgrade on sovereign credit rating downgraded to stable from posititve; brings S&P in line with Moody's and Fitch

THB

Slip in Thai consumer confidence to 73.0 in April from 73.8 in March; energy and food inflation still at forefront of everyone's concerns

South Africa

- Dismal performance in retail sales failed to sell off in ZAR;

- ZAR's lack of response to hawkish SARB comments => either rate hikes priced in '08 already OR bad external environment means rate expectations no longer the driver of the currency

- Odd timing of Easter could've affected retail sales, as PMI and Manufacturing output all weaker (fewer business days in March), => better than expected readings now in April data

- even with hawkish comments, some saying will hike 100bps, but we think still 50 as they've been very predictable in reacinting in "facilitating an efficient formation of expectations"

- 100 day MA = 7.5838; 20 day MA = 7.6274; lower end of Bollinger = 7.4764; 7.5870 = 38.2% fibonacci

- Bharti exploring a stock swap after their shares fell sharply on speculation; UAE's Emirates Telecommunications and China Mobile also looking at options

May 14th, 2008

RUB
- RUB weakened further against the USD/EUR basket as dealers cited a big client order and doubts of the CBR letting the ccy appreciate
- speculative position growing as banks taking "short positions against the basket"
- Putin signaled "okay to live with double digit inflation for the next few years"
- CB uses a dual ccy basket of 0.55 dollars, 0.45 euros
- weakaned 10 kopecks from 29.61 t 29.71
- on Tuesday Medvedev appointed Akrady Dvorkovich, an opponent of RUB appreciation as top economic aide
- FM Alexei Kudrin who has argued with Dvorkovich over whether economy is overheating also kept his post
- in statement CBR said the "situaton in the local FX market, the trade balance, and the federal budget will be the aims of intervention as opposed to current aim of avoiding sharp fluctauations in RUB moves against basket"

South Africa

Vietnam
- gained the most since 21Mar 0.13% to 16,132.50 as CB sold FX to support the currency
- State bank will sell foreign currency to meet demand from commercial banks to lend to its customers to import gasoline
- State bank raised interest rates, increased reserve requirements, and allowed dong to strengthen to cut money supply and slow inflation
- 29Apr the commercial banks agreed to raise dong interest rates by 1% to 12%

Shortcovering in USD/Asia continued even as Asian equities were positive across the board. China curve shifted way right along with USD/INR and USD/PHP hitting recent highs. We view these moves to be driven more from positioning rather than an overall shift in fundamentals. US equity markets roared ahead on the back of a positive CPI number and overnight selloff in EM retraced as ZAR, TRY, HUF all came off their highs. General USD strength with EUR touching down to 1.5396 and USD/JPY breaking 105 to a high of 105.45.

May 13th, 2008

UK CPI at 3.0%, higher than expected
- core inflation up 1.2 to 1.4% also indicating not just food/energy related
CNY: buying interest in long end of the curve still intact
PHP: Spot traded to a year high of 42.755 as negative growth outlook, worse budget, and trade deficit

SGD
- failure to break 1.3640 encouraged profit taking and we broke back on the upside to 1.3700, resistance around the figure, support at 3650
1.3719 12May high, .3735 09May high, 1.3800 08May high

THB
Spot heading higher, state names trying to offer but market still wanting to buy the pair
BoT gov Watangase said they see Q1 growth at 5% and said CB ready to stem speculation

ZAR:
Retail sales tonight
Top brass in ANC stated it will support Zuma through the elections even with trial in August
Now speculation that MTN will be taken over by UAE's emirates communication corp
MPC statement should spur further speculation as SARB's past estimates have understated food and fuel
7.5490 = 23.6%; 7.4870 = 0.0%

May 12th, 2008

USD strength thesis is US is in a recession but others soon to follow; Fed already had easing cycle but BoE and ECB soon to fllow
US has 765 cars for every 1,000 people; China has 10 cars per 1,000 people
Turkey rate decision on Thursday

SGD: Pair tested below to 1.3650 (61 the low) but state name buying bounced up through 1.3700; tracking EUR
- PBOC hiked RRR by 50bps to 16.5% effective on 20May
- FM said no change to 2008 fiscal deficit target despite esacalating food/fuel costs
- this week looking at retail sale, NoDX, and GDP

THB: Buying interest from the outset with swap also shifting to the right
- gapped above 32.00 to 32.20 next, with 32.40 after that; should see BoT capping rallies with oil prices and inflation => importers and investors shorting THB
- FM opined the full year growth will come in at 6.0%
- Thailand's Surapong said 2008 inflation may be faster than 5%

South Africa
Correction on Friday was from 1) dip in SARB gold and FX reserves 2) dip in global equity markets
Reserves decline not a huge deal with dip caused by gold prices (FX reserves increased), but market still weary of c/a deficit financing
This week look for strengthening USD to hurt all commodity currencies, especially those with weak fundamentals (ZAR)
Techmical indicators show push up to 7.85 - 7.92 over next two weeks
Next week look for inflation figures and Q1 GDP growth for SARB outlook
NERSA verdict on Eskom's 53% price request due out on 06Jun

A mixed day in the market as Asian currencies settled down from the massive short-covering of the past week. With EUR recovering back above 1.5500 we saw USD/SGD collapse back to 1.3660 level, ending the day at the low of 1.3635. Very light data globally but US equities responded positively to lower oil and generally positive risk sentiment. EM responded accordingly with ZAR, TRY, BRL, all appreciating and MXN appreciating singnificantly dropping from 10.57 on Friday to 10.48 at the close. Should continue to see a mixed market as Asia move appears to be losing steam and China's hiking the RRR again by 50bps reminds markets that inflation remains a great risk and currencies potentially will appreciate accordingly.

May 9th, 2008

KRW: Spot closed at the lows but short-covering on lower equities saw the pair bid up again
SGD: Selling from local names ubt good bids beneath 1.3700; Bob bought another 250 usd around 1.3717
- FM Tharman Shanmugaratnam said inflation expected to ease in H2
THB: Offshore curve very biddish, spot should try 32.00

EUR gained on hawkish comments from Trichet who indicated inflation is "disconcertingly high"
Bank of England kept rates unchanged at 5.0%

South Africa
ZAR dropped 1.9% to 7.74; weakest level since 25Apr
Gross gold and FX reserves droped to 34.3bn vs. gain of 0.6% in Feb
- change reflects valuation adjustments in value of USD + decrease in USD price of gold
- reserves important to cover rising import requirements because of highest c/a deficit in 36yrs of 7.3% of GDP
- FX reserves were up $151mm but gold reserves (which account for 10% of gross)) fell as gold price fell 7%

May 8th, 2008

KRW: BoK announed no change in policy and USDKRW touched 1050
SGD: Well bid with Bob buying $510mio, MAS suspected around 1.3800 when NEER lowered to 1%
THB: Fell prey to shortcovering, daily funding originally trading at a discount but exploded to the right
Thai FM said expecting 6% growth

FT reports the US and EU working together to see USD stregthen against EUR

Another wild and volatile day in Asia with massive short-covering across the board with USD/KRW contiuing its skyward ascent hitting 1050, USD/CNY breaking through the 7.00 level, and USD/INR, USD/PHP, and USD/TWD all being bid up. SGD weakened by over 1% as rumors of a large fund stop loss permeated the market. Things began to settle down as London came in as EUR recovered from its drop to 1.5285 low back towards 1.5400. Overall a mixed sentiment throughout the market as US markets were cautiously positive in contrast to the Asian selloff and mixed EMEA markets.

May 7th, 2008

I will make my budget. Whatever else may happen, that cannot be taken away!
THB: BoT Dep Governor Atchana Waiquamdee said central bank monitoring inflation after major surprise in April CPI; BoT still hesitant to raise rates after economy just getting out of military regime and capital controls; probably maintain at 3.25% until H2


South Africa
- Bharti/MTN takeover talks still dominating sentiment; if deal is finalized then will see strength to supports of 7.49 then 7.46, above resistance at 7.56 then 7.62;
- USDZAR slightly oversold so moves to the downside will be slow and will be vulnerable to the topside on risk aversion
- 7 consecutive sessions in 7.50 - 7.65 range; several factors keeping in deadlock; 2 week bull run (16Apr to 28Apr) has exposed profit takeers
Fundamentals: all releaseas have been ZAR positive, with private credit number, PMI, JSE Top-40 index highe with metals prices

Russia
Inflation at 10%, highest since April '03; Medvedev given task of balancing inflation and economic growth
Alexei Ulyuakayev - Deputy Central Bank Governor: will use all tools availale including exchange rate policy
"we don't exclude --but we're not saying that we're going to do it -- the use of exchange rate policy to control inflation"
Commerzbank: central bank trying to confuse the market from intentions on RUB to deter people from betting
After Ulyuakayev's comments; fellow deputy Konstantin Korischenko said that betting on an advance in RUB is "irrational"
last time RUB strengthened was August, when inflation was 8.5%
two rate hikes hasnt curbed as low domestic demand
Medvedev remains chairman of Gazprom, natural gas export monopoly; while commenting on corruption Medvedev has said Russia's problem pervades government on an "enormous scale"
- In Nov '06 study estimated $240bn in bribes taken a year
Putin claims he wont push through a constitutional amendment to increase his power, but 05May report he will

A negative day throughout the globe as the market corrected from the positive sentiment of the past week. Asian currencies were massively sold off as rumors that CNY appreciation would be slowed saw short-covering in USD/Asia with INR, PHP, and TWD all seeing +1% moves. Markets were dominated by inflation concerns as record oil prices continue to put most EM central banks in hawkish stances. Speculation of a Russian revaluaton continue as inflation is the predominant concern and rate hikes have had a negligible impact. US markets continued the global selloff with equities coming off significantly as the day progressed and all EM selling off against the USD while EURJPY (the best proxy of risk appetite) came off nearly 200 pts.

May 6th, 2008

KRW: Expect USDKRW to stay bid on higher oil and worse c/a deficit; BoK should sell around
CNY: Another short-squeeze day with 1yr 400pips higher even with spot steady around 6.9900
SGD: Pushed lower towards 1.3570 as NEER pushed up to 2% range
- PMI print of 49.3, lowest since Jan 2002;

South Africa

May 5th, 2008

SGD: saw pullback through 1.3600 to 1.3585, next support at 1.3563 01May low; 1.3546 30Apr low; 1.3468 23Apr low
- PM Lee said country still on track for 4-6% GDP growth in '08 but susceptible to global slowdown
KRW: given down from 1012.5 high to 1009.5
HKMA cut discount rate by 25bps to 3.5% on Fed move
Thai inflation up 6.2%, mktexp 5.2%


South Africa:
Morgan Stanley has SA ranked 15 out of 20 on EM scale; to be more positive would need:
- ZAR to depreciate to 8.50 - 9.00 as currency risk of biggest concern
- need certainty that current hiking cycle is over
- evidence inflation is taken care of
- reduction in the c/a deficit
- Political uncertainty removed in terms of Zuma's court appearance which hasnt been factored in yet
- South African median house prices fell 8.6% in April as higher rates weighed on consumers

May 2nd, 2008

KRW: Hedge fund buying pushed to 1014, no onshore shortage of USD
Gold fell through 850.
Thailand in talks with Laos, Vietnam, Cambodia, and Myanmar to start a rice cartel, but not like OPEC

Markets were positive overnight as Asian markets were positive across the board ahead of NFP. Asian currencies continue to weaken against the USD but we're seeing this more of a reaction to USD strength as opposed to Asia weakeness, as USDJPY continues its upward climb. The NFP only strengthened the sentiment of the past week as it was much stronger than expected and markets reacted accordingly. EURUSD broke through 1.5400 with USDZAR, USDTRY, and USDBRL all collapsing. The followthrough was not significant however as stocks tailed off and ended the day mildly positive and most EM ccy pairs ended the day near the NY opening levels.