1. These currencies have plunged the most
- The pandemic has hit China, Iran, Western Europe and the U.S. the hardest. But falling oil prices and global economic stress has led to capital flowing out of emerging markets in a flight to safety.
- The currencies in Russia, Mexico and Colombia have all fallen 20 percent since the start of the year.
- The six oil-producing members of the Gulf Cooperation Council – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – all have currency pegs that they need to defend, which means that while their currencies remain unchanged, the crash in crude prices will bleed them of foreign exchange. The GCC fiscal deficit will rise to 14 percent of GDP with oil prices at $30 per barrel, according to Bloomberg.
- Nigeria’s currency peg is one of the most unsustainable. Foreign exchange has declined by 20 percent since last summer to $36 billion, according to Bloomberg.
2. Big Oil’s dividends on borrowed time
- As share prices for the oil majors plunge, their dividend yields have spiked. All of the five majors – ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS.A) and Total (NYSE: TOT) have yields above 10 percent. Shell’s yield is approaching 15 percent, for example.
- “Nobody wants to be the CEO who cuts the dividend,” Noah Barrett, a Denver-based energy analyst at Janus Henderson Group Plc, told Bloomberg.…