When will the US start hiking its interest rates? The answer to this question is keeping the global currency market in a jittery mood. The turbulence in the global currency market in 2013 following the US Federal Reserve announcing its plan to wind down quantitative easing, is well known. Many currencies, including the Indian rupee, tumbled to their all-time lows against the US dollar then. While most currencies have since recovered from their lows a few are still hovering around their lifetime lows against the greenback. These include the Mexican and Argentine peso and the Turkish lira.

The Mexican peso fell to its all-time low of 15.65 in March and is currently poised at 15.12 to the dollar. The previous record low was 15.57, seen in March 2009 following the US financial crisis. This time, the fall to a new record low is attributed to the meltdown in crude oil prices. Oil prices tumbling about 58 per cent from a high of $107 a barrel last year to $45 levels this year (albeit a recent rebound) has pressured the peso. Mexico is among the top 10 oil exporters in the world and oil is one of the top five exports for Mexico. In December 2013, the Mexican Government passed legislation, which was later signed into law, to allow foreign investments and private players into oil and gas drilling. The oil and gas sector was totally under the government’s control since 1938. Foreign investment of about $250 billion was expected by 2018 though this reform hasn’t yet materialised, as investments were stalled following the oil price fall. The recent reversal in oil, if sustained, could be a factor supporting the Mexican peso in the coming months.

Weak macros The Turkish lira, at 2.69 against the greenback, has responded to domestic concerns and underperformed against its emerging market peers this year. Increasing unemployment is a major concern for the country.

The unemployment rate has been on the rise for almost three years now. It has risen from 7.3 per cent in June 2012 and to a five-year high of 11.3 per cent (January this year) now.

The contraction in the manufacturing sector is another concern which keeps the currency under pressure.

HSBC’s Manufacturing Purchasing Managers’ Index (PMI) for Turkey has been in declining mode from its November 2013 high of 55.

The index has declined and has been sustaining below 50 levels for four consecutive months since January. The country has general elections coming up on June 7.

The uncertainty over who will form the next government could continue to keep the currency under pressure.

Argentina too, had domestic debt woes and constant devaluation of its currency has taken it close to its all-time low.

Uncertainty had reached a head in the country after a debt default on dues of $1.3 billion way back in 2001.

One common factor that continues to keep all the above currencies under pressure (the rupee is no exception) is the fear of interest rate hikes in the US which are expected later this year. Although the Indian rupee has gained ground from its all-time low of 68.85 in August 2013, the currency declining below 64 last week is fanning worries of a renewed leg of decline.

Will the Indian rupee also join the other currencies in declining to a fresh low again? We’ll have to wait and see.

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