The Japanese bank said its Damocles index, which “summarizes macroeconomic and financial variables into a single measure to assess an economy’s vulnerability to a currency crisis,” was currently pointing to seven countries at risk of an exchange rate crash. Brazil, Bulgaria, Indonesia, Kazakhstan, Peru, the Philippines, Russia and Thailand, on the other hand, had Damocles scores of zero, which Nomura described as an “important result”. As of August, the country’s foreign exchange reserves stood $77.828 billion, enough to cover 7.5 months’ worth of imports. Nomura also said that real interest rates in the Philippines were also negative amid aggressive rate hikes by the Bangko Sentral ng Pilipinas in response to accelerating inflation. Above-target inflation in March has prompted monetary authorities to raise key interest rates by a total of 100 basis points since May.

Source: Manila Times September 10, 2018 16:18 UTC