After getting battered for most of 2023, emerging market (EM) currencies have made modest gains against the dollar after the Federal Reserve held interest rates steady last week and data suggested the U.S. economy might finally be slowing.
That dollar weakening trend was likely to hold in the near-term as a majority of analysts in the Nov. 3-7 Reuters poll expected the dollar to trade lower by year-end.
"So it's difficult to see the EM currencies recoup some of the sharp losses that we've seen in the last few months.
Although EM currencies gained at the beginning of 2023 and investors brimmed with positivity after China's post-COVID reopening, economic performance in the world's second largest economy has been mostly underwhelming.
"Easier Fed monetary policy should also take some pressure off select emerging market currencies in the second half of next year," noted Nick Bennenbroek, international economist at Wells Fargo.
Persons:
We've, Mitul Kotecha, we've, it's, Nick Bennenbroek, Devayani Sathyan, Anant Chandak, Hari Kishan, Ross Finley, Mark Potter
Organizations:
Federal Reserve, Reuters, FX, Asia, Barclays, South Korean, Thomson
Locations:
BENGALURU, JOHANNESBURG, U.S, Brazilian, Wells Fargo