![]() The rand jumped 1.33%, with its fortunes tied to the yuan’s strength given that China is the biggest buyer of South African commodities. While this has been reflected in the Chilean peso and Hungarian forint, among the worst emerging-market performers in the past month, the Mexican peso and South African rand will be vulnerable in the fourth quarter, he said. “Higher real yields weigh on global growth prospects and will eventually lead to higher volatility, which in turn will make the currencies which have benefited from carry vulnerable,” said Henrik Gullberg, macro economist at Coex Partners Ltd. Treasury yields are hovering near the highest levels since before the 2008 financial crisis, eroding emerging markets’ yield premium. Investors are awaiting a US consumer-price index report this week that may offer clues on the Federal Reserve’s interest-rate path. Traders are bracing for more volatility, with expected swings for developing currencies rising on Monday. A gauge of the dollar fell, halting an eight-week surge, after the People’s Bank of China escalated its defense of the yuan and the Bank of Japan hinted at the possibility of ending the developed world’s last negative interest rate.īut emerging-market bears aren’t convinced that the worst is over, after a 0.8% drop last week threatened to erase the year’s gains. MSCI Inc.’s index of developing-nation currencies rose 0.00420%, with the Chinese yuan and South African rand among the leading gainers. ![]() (Bloomberg) - Developing currencies strengthened after central banks in China and Japan pushed back against the dollar’s recent rally.
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