Market Forces
Featuring Rachel Ziemba
Demetri Kofinas speaks with Emerging Markets Analyst Rachel Ziemba. They explore the geopolitical crisis unfolding in North Korea, as well as the falling dollar and the forward volatility of the carry-trade. They also discuss the fragile geopolitical position of Saudi Arabia, with its dwindling foreign exchange reserves.

In this this week’s Market Forces segment, host Demetri Kofinas speaks with Emerging Markets Analyst Rachel Ziemba. Rachel leads Emerging Markets coverage for Roubini Global Economics and writes extensively across all three EM/Frontier regions, as well as about commodities. She has a particular interest in the macroeconomics of oil-exporting nations, including the management of oil wealth, energy-sector supply risks, and China. Rachel has served as an expert member of task forces in the U.S, and the UK on issues ranging from economic sanctions, Chinese security challenges, Egypt and sovereign wealth funds.

Today’s conversation begins with a look at North Korea and the geopolitical crisis that is unfolding on the Korean Peninsula. Why are financial markets so bad at pricing geopolitical risk and do governments even have a firm grasp on the evolving threat of a nuclear exchange between the United States and the regime of Kim Jong-un?

Our conversation eventually shifts to the matter of the falling dollar. What has been driving the fall in the dollar since the beginning of 2017? Have we seen a bottom or could the dollar fall another five, ten, or even twenty percent from these levels? The greenback has fallen despite a further drop in yields on 10-year and 30-year US treasuries. This is particularly relevant in light of the dollar carry-trade, which has benefited from the Federal Reserve's policy of low interest rates in the United States. How has the dollar's role as a funding currency for emerging markets played a role in the recent rise in equities and bond prices in some of these markets? What can forward volatility and the price of currency swaps tell us about the risk of a snap-back in the dollar carry-trade?

Finally, Rachel and Demetri discuss energy markets, specifically the chronically low price of oil and its effects on the oil and natural gas industries in the United States, as well as those abroad. In particular, the two discuss the case of Saudi Arabia, with its dwindling foreign exchange reserves and fragile geopolitical position.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation at @hiddenforcespod

Rachel Ziemba is an Adjunct Senior Fellow at the Center for a New American Security (CNAS). Her research focuses on the interlinkages between economics, finance and security issues. Her research topics include coercive economic policies such as sanctions, economic resilience and the role of state-owned investors including sovereign wealth funds.

She also serves as the head of emerging markets research at 4CAST-RGE (formerly Roubini Global Economics, a global macro strategy and country risk firm.

Rachel has a particular interest in the macroeconomics and foreign policy of China and oil-exporting nations, including the management of national wealth and energy-sector supply risks and resilience. She also does extensive work on global macroeconomic issues, particularly foreign-exchange reserve accumulation, sovereign-wealth management and economic imbalances. Rachel also worked for the Canadian International Development Agency in Cairo, Egypt, and the International Development Research Centre in Ottawa, Canada on development economic issues.

Rachel regularly serves as an expert commentator in key media outlets, and her research has been cited by a range of international financial institutions. She has served on a range of task forces aimed to generate policy ideas on Egypt, Middle East policy and economic sanctions.  She is the co-author of “Scenarios for Risk Management and Global Investment Strategies” (with William T. Ziemba), published by Wiley in January 2008.

She holds a bachelor’s degree from the University of Chicago with honors, and a Master of Philosophy degree in international relations with a specialization in international political economy from St. Antony’s College, Oxford University.