Currency and the "So What" for OGX, page-77

An interesting article from ZH for the currency afficionados regarding the Brazilian Real. Not cross-promoting:

https://www.zerohedge.com/news/2018-08-21/bofas-emerging-market-crisis-indicator-was-just-triggered

Selected excerpts below. Apologies as I don't know how to copy whole article.
BofA's Emerging Market Crisis" Indicator Was Just Triggered

While the market is distracted by record stock highs, a week-long vacation in Turkey, and a mysterious pre-talks bid in the offshore yuan, the truth is that this Emerging Market crisis has been a long time in the making, and based on the Brazilian Real's collapsed above 4/USD, it has a long way to go.

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And as we highlighted in early May, BofA's Chief Investment Officer Michael Hartnett observed that higher US rates finally caused a higher US dollar (courtesy of the PBOC), at which point "EM started to crack." But while many had pointed at the collapse in the Turkish Lira, the Argentine Peso, and the Indonesia Rupiah, as cracks in the EM narrative, the truth is that many of these are idiosyncratic stories.
So how could one decide if the Emerging Market turmoil - whether started by Turkey, Argentina, Russia, China, or any other EM country - was set about to sweep across the entire sector, and result in DM contagion? According to Bank of America the answer was simple. This is what Hartnett said in early May:
"EM FX never lies and a plunge in Brazilian real toward 4 versus US dollar is likely to cause deleveraging and contagion across credit portfolios."
In other words, to Bank of America, the best indicator of imminent emerging market turmoil is shown in the chart below dated circa three months ago: and as BRL crosses 4.00, it may be a good time to panic as contagion is about to go global.

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