Emerging markets currencies under pressure – Nordea Markets
|Emerging markets currencies have sold off massively this year with ARS and TRY in the lead, points out the research team at Nordea Markets.
Key Quotes
“Domestic politics, trade war rumblings and US sanctions, a stronger USD, and the Fed's balance-sheet reductions make for a fairly bleak outlook in EM FX.”
“We note that, as many of the risks are political, forecasts are more uncertain than usual, but are generally changing to a more negative view on EM FX.”
“CNY: weak, but not too weak: The Chinese yuan will likely face continued pressure in the coming months as the trade war with the US persists. We do not expect Beijing to devalue the yuan at present, as this is associated with larger costs than benefits.”
“RUB: victim of US relations
The RUB will likely remain extremely vulnerable to the sanctions rhetoric from the US in the run-up to the November mid-term elections. We still do not see the approval of sanctions in their toughest form as our base case scenario but a certain tightening of sanctions is very likely.”
“PLN: More headwinds
Lukewarm market sentiment keeps pressuring the zloty. Combined with rising political risks and a dovish NBP, the PLN could face more headwinds.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.