Turning the Corner – EM Currencies Take A Knock

Since the end of the first quarter, the outlook for higher U.S. interest rates has been accompanied by a major sell-off in a number of EM currencies. We haven’t seen FX declines of this magnitude since the taper tantrum of 2013.

In this paper, Sudhir Roc-Sennett from the research team outlines our view that the sell off reflects the tipping point where interest rates are finally letting bonds attract money back from equities – leading investors to take a more sanguine view of country and equity risk. We explore where the selling has focused and whether fundamentals have changed.