Emerging Markets FX Monocle – a lot of news, little action
Risk is mispriced, again. And hence caution is still essential. But unless some of the key risks actually materialise, we are most likely to see Emerging currencies drift stronger over the coming months.
Emerging currencies have been rather stable on average during March vs a fifty-fifty EUR and USD basket. Additional liquidity from the ECB’s LTRO did not spark a new round of increased risk perception and capital flows to Emerging Markets. However, liquidity remains abundant and is offsetting the numerous risks that are still out there.
A lot of news, little action.
Read more on the PLN, the RUB, the CNY, or other emerging currencies in the full report below.