Yuan devaluation to Colombia peace deal: Top 5 global developments of 2016

While Brexit and Trump's win went against the popular mood, victories against ISIS were welcome news

The world witnessed several surprise socio-economic and political incidents throughout 2016, such as Bob Dylan's getting the Literature Nobel and Donald Trump's victory in the US presidential election. Major victories against the Islamic State by Iraqi and Syrian troops, with US and Russian assistance, on the other hand, made for welcome news, while winning the UEFA European Championship 2016 was a dream come true for Portugal and fans of Christiano Ronaldo. Business Standard brings you the top five global developments during 2016:

Yuan devaluation and Chinese Forex reduction:

Soon after the US Federal Reserve's announcement of a 25 basis points spike in the interest rates in December 2015, China’s attempts to devalue its currency yuan in January 2016 spooked the global markets. Though the currency consolidated against US dollar till April, its downward journey thereafter eventually became the new normal. The yuan fell from 6.5 to the dollar on January 1 to 6.95 on December 28. This also was a key factor that led to the huge reduction in the country's foreign exchange reserves. Citing the People’s Bank of China's statement, Bloomberg said that reserves stood at $3.05 trillion in November, about 25% less from the country's peak reserves at $4 trillion in June 2014. The strengthening of dollar after the US elections and the 25 basis points Fed rate hike in December may further weaken the yuan.

Brexit:

Like the Independence referendum on Scotland's breakaway from the United Kingdom in September 2014, which didn't eventually see the highland territory's exit, Brexit, was a June 2016 vote that would decide whether or not the UK remained part of the European Union. The "Yes" campaign for "Brexit" was aggressively led by the populist right-wing leaders such as Boris Johnson, Michael Gove, Nigel Farage. Contrary to predictions from various quarters, Britain did finally exit, triggered largely by an anti-immigration wave that swept the country.

The downside of this development is that there are now fresh demands for another referendum on Scotland's potential breaking away from the UK, as the majority of the territory's population had indicated that it wanted to stay with the EU.

The US President-elect Donald Trump:

Donald Trump's victory against Hillary Clinton in the US presidential election reflected the populist rant of the anti-globalisation and anti-immigration — especially because of a mass influx of people from North Africa, Iraq, Syria and several other countries affected by Islamic extremism. Trump snatched the victory from the Clinton despite the fact that she won the popular mandate, and despite his misogynistic, anti-Islamic and racist campaign. This is why the election was seen as a setback to the liberal consensus. He also managed to overcome the US mainstream media's campaign against him. Trump's victory is being considered unique in the US electoral history because he is the first candidate to become the President-elect without holding the public office even for once.

Colombia peace deal:

The Colombian government led by President Juan Manuel Santos had managed to strike a peace accord with the rebel guerrilla group, Revolutionary Armed Forces of Colombia (FARC), thus, ending the 52-year old era of civil war and instability. After getting rejected in the popular vote by the Colombian people with a small margin, the modified deal passed the test of Parliament in November, bypassing the earlier vote. The deal got the 2016 Nobel Peace for Santos. The implementation of the deal remains difficult as most voters felt it was too lenient, with reduced sentences in exchange for confessions, especially in the backdrop of the FARC’s long history of kidnappings and killings.  

Opec deal:

With crude oil prices having remained subdued for the past few years due to oversupply, many oil-producing countries started demanding production cuts to balance the supply-demand equilibrium. After resisting almost for two years, Saudi Arabia finally agreed to a global oil production cut of around 1.2 million barrels per day (bpd) demanded by the Organisation of the Petroleum Exporting Countries (Opec). This deal also insists upon the 600,000 bpd oil production cut by the non-Opec countries such as Russia. Such a sizable cut has been the first since 2008. After touching a historic low of $27.88 per barrel in January 2016, brent crude traded at $56.7 as of December 30, and has been mostly trending above $50 a barrel after the deal announcement.

But there are hiccups -- After the removal of economic sanctions from the West, Iran indicated it had no plans to put in place a production cut, and is planning to increase production instead. In the aftermath of the fall of dictator Muammar Gaddafi, civil war and terrorist insurgencies in Libya eased in the second half of 2016. Therefore, Libya's National Oil Corporation has been granted exemptions by the dealmakers for the production cut. There are also fears of an increase in shale production if the shale producers smell an opportunity in the deal.