Meet world’s best EM currencies forecaster; lone Pole who knows how to read the rand

At a BizNews Finance Friday webinar, global trading strategist Fred Razak of CMTrading said that the best traders have a natural instinct. Numeracy and training can help, but those who make money have a talent for reading the undercurrents that can’t be taught. Razak’s theory is backed by the rankings of the best foreign currency traders. The world’s best forecaster for emerging market currencies is a lone strategist who lives in western Poland. Bartosz Grejner shares some insights on how he has beat analysts at the top firms. In a nutshell, he makes short-term returns by thinking about the longer-term picture and reflects on what history tells us about how other traders will react to major events, like Covid-19. – Editor

Lone Polish analyst becomes EM currencies top forecaster

By Lilian Karunungan

(Bloomberg) — A lone foreign-exchange strategist who works in a small city in western Poland better known for its annual wine festival than its financial-services industry has become the most accurate forecaster for emerging-market currencies.

Analyst Bartosz Grejner, the sole foreign-exchange analyst at Cinkciarz.pl, beat 25 qualifying firms including Credit Agricole SA, Commerzbank AG and JPMorgan Chase & Co. by betting the currencies would bounce back last quarter as central banks piled on stimulus. Grejner, who was first in Bloomberg’s Asian and Latin American rankings and second for the Europe, Middle East and Africa region, says the rally will face increased challenges in coming months as looming risks revive demand for the dollar.

EM currencies

“After the financial crisis from a decade ago, I suspected that facing an unknown virus, central banks and governments would virtually have a mandate to overreact,” said Grejner, who’s based in Zielona Gora, about 40 miles from the German border. “The increased risk-off tone will somewhat diminish the potential gains for emerging-market currencies. For the second half of the year, I see dollar strength.”

The MSCI Emerging Markets Currency Index dropped 6% in the first quarter as the coronavirus crisis pummeled risk assets. It has since retraced almost half those losses as policy makers boosted stimulus to counter the impact of the lockdowns. The Indonesian rupiah has led gains from the gauge’s March 23 low, strengthening 15%, while the Colombian peso and Russian ruble have both risen about 12%.

‘Deciding Factor’

Grejner, who’s 34, says the best way to see through the uncertainty is to focus on the major long-term themes and ignore the day-to-day volatility.

“You have regional- or country-specific factors such as looking at which sectors were most hit by the lockdowns, but I believe getting the underlying theme right was the deciding factor in getting any forecasts right in a broad sense,” he said in a interview.

Grejner was almost spot on predicting the highly volatile Indonesian rupiah. His mid-year forecast of 14,500 versus the median of 15,280 was near the June closing low of 14,265. He was also most accurate in predicting the outcomes for the South African rand and the Polish zloty.

Emerging-market currencies may come under pressure later this year as there are a number of looming global risks that may help bring about a stronger dollar, Grejner said. These include uncertainty over the U.S. elections in November, the potential for U.S.-China tensions to escalate, as well as the U.K.’s year-end Brexit negotiations.

“There are so many risks that are packed into those few months,” he said.

Below are the year-end forecasts for some currencies from Grejner, who expects them to settle closer to their “more normal levels” in early March before the panic in markets that month:

End-2020 Estimates per dollarCurrent Price
Indonesian rupiah14,20014,395
Polish zloty3.913.9499
South African rand16.0016.8412
Brazilian real4.55.3396 (As of July 8 close)

(Updates with year-end currency forecasts at the end.)

–With assistance from Wei Lu and Tomoko Yamazaki.

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