The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

FX round up: The new sub-prime?

The huge losses being reported by corporates from emerging markets around the world suggest that not all is as rosy in FX as might have been reported.

Although optimism remains high that the FX market can continue its overall strong performance of recent years, a few doubts are starting to creep in. Much has been made of the acceptance of FX as an asset class. However, the same was once said of the sub-prime mortgage sector, and nobody needs to be reminded how fallacious that was.

The huge losses being reported by corporates from emerging markets around the world suggest that not all is as rosy in FX as might have been reported. Fears this will make it, as one senior figure shuddered recently, the next sub-prime are possibly far fetched. But there will be recriminations. As a trader from one sell-side participant in London asked after reports that Hong Kong-based Citic Pacific had blown close to $2 billion in option trades: "And who were the main banks behind the Citic trades? Looks like Ashanti all over again." The fall-out from the Ashanti Goldfields debacle lasted years, and many corporates, particularly from the mining sector, ceased using derivatives as a result. Let’s hope history does not repeat itself.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree