In the week ending on September 27th, two currencies drew significant attention: the Argentine peso (USDARS) and the Colombian peso (USDCOP). Their movements present a fascinating narrative of both gains and losses in the world of Latin America’s currency trading.

On September 27, the Argentinian Peso USDARS increased slightly by 0.7370, or 0.08%, to 967.9740 from 967.2370. While this increase is modest, it exhibits remarkable resilience in the face of historical volatility, especially when considering that the USDARS reached an all-time high of 14,850 in September 2020.

Despite the ongoing economic hurdles, the relative stability of the Argentine peso can be linked to several factors, including geopolitical influences and commodity exports.

Historically reliant on agriculture, Argentina has faced substantial challenges; however, recent patterns suggest some improvement. Investors are showing cautious optimism, especially with robust global demand for soybeans and other agricultural products.

Though the latest increase in the USDARS outlook is positive, there are still concerns about inflation and fiscal policy.

Argentina is battling with high inflation rates, which rose to 236.7% in August, and frequently erodes buying power and discourages investment.

Nonetheless, the current strength of the USDARS demonstrates the possibility of economic recovery and currency stability, even in uncertain times.

The USDCOP shows a small decline

In comparison, the Colombian Peso (USDCOP) fell 2.8500 points, or 0.07%, to 4,163.6500 from 4,166.5000 on Friday. The USDCOP earlier peaked at 5,118.38 in November 2022, reflecting the currency’s complicated issues.

This decreasing trend indicates various underlying factors, most notably investor opinion over Colombia’s economic predicament. Inflation, fluctuating oil prices, and political instability have all had a substantial impact on this development.

Despite the Colombian government’s efforts to stabilize the economy, such as interventions in the oil sector and endeavours to attract foreign investment, the currency’s performance indicates that problems persist.

Moreover, the weakening of the USDCOP sheds light on the broader problems emerging markets currently face, especially those closely tied to commodity prices.

As global economic conditions change and consumer spending adapts in a post-pandemic world, fluctuations in the Colombian peso mirror the delicate balance of trade dynamics and investment confidence.

The Mexican Peso: Strategic retreat

The Mexican peso (USDMXN) also suffered a noteworthy move, falling to 19.65 per USD from a four-week high of 19.12 on September 17.

This reduction follows the Bank of Mexico’s decision to reduce its benchmark interest rate by 25 basis points to 10.50%, which was motivated by positive inflation trends and subsequent market reactions.

While this rate drop was expected, it underscores the central bank’s cautious approach amid ongoing concerns about persistent core inflation, which remains a key issue even though headline inflation has fallen to 4.66% by mid-September 2024.

The combination of weak domestic economic performance, volatile financial markets, and decreasing bond yields has prompted the Bank of Mexico to exercise prudence in future monetary policy adjustments.

The Brazilian Real: A positive outlook

In contrast, the Brazilian (USDBRL) real surpassed 5.5 per USD in September, aided by hawkish forecasts from Brazil’s central bank and a better prognosis for foreign currency inflows following China’s stimulus measures.

The real’s resiliency emphasizes its potential for recovery, indicating increased investor confidence in Brazil’s economic future.

Overall, the volatility of these currencies reflects the complex interplay of global economic factors, investor sentiment, and monetary policies.

As Argentina, Colombia, Mexico, and Brazil manage their respective economic conditions, currency rivalry will continue to influence financial markets in the foreseeable future.

Understanding these transitions is critical for stakeholders in managing risks and capitalizing on opportunities in a changing marketplace.

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Shein, the fast-fashion giant known for its ultra-affordable clothing and rapid production cycle cannot seem to catch a break.

The company already suffered a setback last year when it had to scrap its original plans to list in New York after US lawmakers raised concerns over alleged labour malpractices and lawsuits from competitors, besides flagging the company’s “deep ties to China”.

Now, ahead of a highly-anticipated IPO in London, the news flow related to the company’s practices is causing experts and analysts to wonder if Shein’s UK plans will meet the same fate as its US ambitions.

The China-founded group that made more than $2bn in profits for 2023 and registered sales of $45bn on its website, was valued at $66 billion in its last funding round, and its IPO valuation is expected to hover around that figure.

Accusations of ‘tax dodging’ and impact of regulatory tightening

Earlier this week, Superdry’s chief Julian Dunkerton accused Shein of “dodging tax” and urged the UK government to get rid of the loophole which enabled the fashion major to export individual parcels directly to customers without paying any import duty.

Dunkerton was referring to the rule that exempts shipments worth less than 135 pounds from import duties.

Since Shein dispatches low-value parcels directly to customers from overseas, it is not charged an import duty on them. 

Before the rise of global online marketplaces, the tax exemption had little impact.

However, US and EU retailers now face increasing competition from low-cost Chinese competitors, and state treasuries are missing out on potential tax revenue.

In July, Simon Roberts, CEO of Sainsbury had also advocated for changes to this rule, seeking a level playing field for all retailers. Next CEO Lord Wolfson has called for the same. 

Earlier this month, the US reportedly took the lead in plugging this tax gap and proposed rules that would remove the exemption for Chinese goods in a move directly aimed at companies like Shein and Temu. 

While US said this “de minimis” rule has helped the two companies undercut competitors with lower prices, both Shein and Temu sought to impress that their popularity was not based on the tax rule but on their business models.

Shein also said it supported reform of the de minimis exemption so that rules were applied “equally and evenly”. 

The EU too is reportedly drawing up plans to scrap the 150 euros threshold under which items can be bought duty-free. 

“An open question is how far Shein’s business model would be damaged if custom duties had to be paid,” Nils Pratley, Guardian’s financial editor wrote. Asserting that investors might need some convincing on this front, Pratley added:

Donald Tang, Shein’s executive chair, has argued in the past that the firm embraces reform in the name of “fair competition around the world” and has claimed tax breaks are “not foundational to our success.” Outside investors, one suspects, would want to see detailed evidence to support the latter claim. The core pitch to consumers is that the clothes are dirt-cheap; the customs duty advantage does not feel irrelevant.

Labour violations, design copying, and environmental issues

Apart from tackling accusatory claims about how its using regulatory loopholes to gain an upper hand over its competitors, Shein is also accused of forced labour in its supply chains. 

In June, a human rights group urged Britain’s financial regulator to block Shein’s LSE listing as the company was using minority Uyghur people as forced labour at some of its cotton suppliers in the Xinjiang region. 

Amnesty International UK even said Shein’s potential London listing would be a “badge of shame” for the London market because of the fast-fashion firm’s “questionable” labour and human rights standards.

Shein stated it had a zero-tolerance policy for forced labour and its manufacturers source cotton only from approved regions.

In August, Shein, in its 2023 sustainability report admitted its found two cases of child labour and factories failing to pay the minimum wage in its supply chain last year. 

The company added that both cases were resolved swiftly with actions including terminating contracts with underage employees and other reliefs offered to them. 

An investigation this year by the Swiss-based non-profit group Public Eye also found that people employed to produce garments for Shein routinely work more than 70-hour weeks.

The latest report by WIRED has documented how gig workers in China are vlogging about the allegedly precarious working conditions at Shein’s fulfilment centres on platforms like Bilibili.

Apart from facing scrutiny for its alleged labour malpractices, Shein has also been sued by fashion majors like Uniqlo and H&M for copying their designs. 

On Thursday, Italy’s antitrust agency launched an investigation into a Dublin-based company that operated Shein’s website and app over possibly misleading environmental claims made on Shein’s website. 

Besides, Shein has attracted criticism for promoting disposable clothing and contributing to environmental pollution. 

What happens to Shein’s IPO? Experts weigh in

While the US decided not to have the company list on its bourses after its lawmakers raised concerns discussed above, the jury is out on whether UK would be compelled to do the same. 

Signs of political pressure around its listing have already started to emerge in the UK.

Earlier this month, Liam Byrne, the Labour MP who heads parliament’s business and trade committee called on the government to closely scrutinise Shein for possible links to forced working.

Byrne told the Financial Times he would like to see a British version of the Uyghur Forced Labor Prevention Act from 2021, which bans the use of cotton from Xinjiang by companies in the US. He said:

My view is that we don’t have a Uyghur Forced Labor Prevention Act in Britain and therefore it is incumbent on ministers to satisfy them selves that Shein passes the highest standards on forced labour protections. That is something a Labour government might want to address.

Last month, London Stock Exchange Group chief executive David Schwimmer emphatically denied there would be any “lowering of standards” to lure the fast-fashion retailer. 

Although he did not directly comment on Shein, Schwimmer has said that the exchange’s governance and disclosure regime tends to be “very good for companies in terms of having the disclosure and the scrutiny and the investor participating in how they are managed.”

Sir Ian Cheshire, former chief of B&Q, who was also the former chairman of Barclays, said earlier this week that it would be better for the company to list in the UK as London-listed firms have to meet certain environmental quality controls. 

The alternative could be Shein listing on another exchange, which “might just let them do what they want”, he told the BBC’s Today programme. He said:

I would always vote for companies coming to London to be on the responsible side of the [green] transition and moving in the right direction.

He added that the government could fix the tax mismatch to enable retailers access a level-playing field. 

Meanwhile, Shein’s London IPO plans continue to be clouded with uncertainty.

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After two consecutive weeks of gains, oil prices have fallen back into bear territory this week, as fears about higher supply from Libya and Saudi Arabia outweighed positive signals from China.

Earlier this week, Saudi Arabia reportedly decided to ramp up its oil production starting in December, abandoning its earlier target of maintaining a $100-per-barrel oil price.

This, along with the possibility of higher supply from Libya—where a political dispute was resolved on Thursday—could pave the way for the return of around 500,000 barrels per day of oil from the Middle Eastern country.

Global oil prices slipped following news of the Kingdom considering increased production from December.

At the time of writing, Brent crude oil on the Intercontinental Exchange was at $70.64 per barrel, down from last week’s close of $74.49 per barrel. Since Monday, prices have fallen 5%.

As for West Texas Intermediate (WTI) crude oil, prices have dipped 4% since Monday and are currently around $67.48 per barrel.

On Friday, China’s central bank cut interest rates and provided much-needed liquidity to the banking system.

However, the positive move failed to prop up the mood in oil markets, with traders focusing on the prospect of rising supply.

Though more economic stimulus is expected from China, the world’s largest crude oil importer, next week, the growing prospect of rising supply is likely to continue weighing on prices.

“When we boil everything down, the market faces the stark reality of demand leveling off and supply growing,” Matt Stanley, head of market engagement, EMEA & APAC at Kpler, said in a commentary.

OPEC’s Voluntary Cuts Unwinding to Increase Supply

The Organization of the Petroleum Exporting Countries (OPEC) and its allies have been cutting crude production by 5.86 million barrels per day since last year to keep oil prices at desired levels.

However, barring a brief period in April when Brent prices touched this year’s high of $92 per barrel, the oil market has not been able to sustain those gains.

Weak demand from China and concerns over more oil hitting the market toward the end of the year have complicated matters for OPEC and its allies.

In June, OPEC agreed to start unwinding its 2.2 million barrels per day of voluntary output cuts from October.

However, sliding oil prices prompted the cartel to postpone the unwinding by two more months earlier this month.

The voluntary cuts are borne by only a handful of countries within the cartel.

Saudi Arabia, the de facto leader of the group, has been withholding 1 million barrels per day of oil from the market since late last year, over and above the quota agreed in the Declaration of Cooperation.

If Saudi Arabia and other members agree to unwind some of the voluntary production cuts from December, the oil market could face a substantial surplus.

According to the International Energy Agency (IEA), non-OPEC oil production is expected to rise by 1.5 million barrels per day in 2024 and 2025.

In contrast, OPEC and its allies’ oil output is set to decline by 810,000 barrels per day this year and rise by only 540,000 barrels per day in 2025, the Paris-based energy watchdog said in its September report.

The IEA said:

With non-OPEC+ supply rising faster than overall demand—barring a prolonged stand-off in Libya—OPEC+ may be staring at a substantial surplus, even if its extra curbs were to remain in place.

Poor Demand to Keep Prices Muted

At a time when oil supply is on the rise, global demand is headed in the opposite direction.

Demand for oil rose by just 800,000 barrels per day during the first half of 2024, according to the IEA, which is sharply lower than the growth of 2.3 million barrels per day in 2023.

For the year as a whole, growth in demand is likely to be 900,000 barrels per day in 2024.

“The rapid decline in global oil demand growth in recent months, led by China, has fueled a sharp sell-off in oil markets,” the IEA noted in its report.

Brent crude oil futures have plunged from a high of more than $82 per barrel in early August to a near three-year low of around $71 per barrel, despite hefty supply losses in Libya and continued crude oil inventory draws.

In China, the largest crude importer, demand in 2024 is slated to increase by just 180,000 barrels per day, as the broad-based economic slowdown and an accelerating shift away from oil in favor of alternative fuels weigh on consumption, according to the IEA.

The latest fiscal measures announced by Beijing could provide some support to oil prices, but all eyes will be on the country’s oil imports in the coming months.

At present, the oil market looks increasingly bearish.

“Traders should expect continued downward pressure on crude oil futures unless significant shifts in supply or demand materialize,” James Hyerczyk, an analyst at FXEmpire, said in a report.

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Remote work has experienced a significant surge across the European Union (EU) since the COVID-19 pandemic, with the Netherlands emerging as the frontrunner in telework adoption.

According to Eurostat, in 2023, 22% of individuals aged 15 to 64 in the EU were engaged in remote work, reflecting a shift in work patterns and highlighting disparities among member states.

Data reveals that out of the 22% of EU remote workers, 9% were doing so regularly and 13% on occasion.

This marks an eight percentage point increase since 2019, before the pandemic, underscoring a trend toward flexible working arrangements.

The statistics indicate notable disparities among EU countries.

The Netherlands leads with an impressive 51.9% of its workforce working remotely at least part-time.

Following closely are Sweden (45.3%), Iceland (42.6%), and other Nordic countries like Norway and Finland, which hover around 42%.

Conversely, nations like Germany, Italy, and Spain report much lower remote work acceptance, with Germany at 23.4% and Italy and Spain below 15%.

In Eastern Europe, countries such as Romania and Bulgaria face significant hurdles, with only about 3% of their working populations engaged in remote work.

What’s driving remote work adoption

The adoption of remote work is influenced by various factors, including the degree of tertiarization and digitalization within a country’s economy.

Tertiarization refers to the shift from primary (agricultural) and secondary (manufacturing) sectors to the service-oriented tertiary sector, which typically offers more telework-friendly jobs.

Digitalization also plays a crucial role; nations with advanced technological infrastructures are more likely to facilitate the transition to remote work.

In countries with robust technology frameworks, businesses are more inclined to implement remote work policies, resulting in higher telework rates.

The high telework adoption rates in the Netherlands and Sweden can be attributed to their progressive labor laws and strong emphasis on work-life balance.

Both countries have fostered a supportive environment for remote work through effective legislation and healthcare initiatives aimed at enhancing employee well-being.

This focus not only smooths the transition to telework but also boosts overall workplace satisfaction and productivity.

Challenges in Eastern Europe

In contrast, the lower telework rates in Eastern Europe highlight several challenges.

Issues such as underdeveloped digital infrastructure, a lower degree of economic tertiarization, and cultural attitudes towards work can hinder remote work acceptance.

In Romania and Bulgaria, limited access to digital resources and a lack of telework-friendly policies further complicate the adaptation of workforce practices.

Eurostat’s data illustrate a growing acceptance of remote work within the EU, albeit with varying levels of engagement among member states.

This increase in teleworking reflects broader societal shifts triggered by the pandemic, while also emphasizing the significance of economic structures and infrastructure in shaping employment behaviors.

As countries adapt to this evolving work landscape, understanding regional differences will be vital in ensuring equitable access to remote job opportunities.

The rise of teleworking presents both challenges and opportunities in the expanding European job market.

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