2023-09-07 06:00:00
Las coins and shares from the developing world were weakened because a renewed dollar strength and the high oil prices lowered confidence in the riskiest emerging assets, which led Barclays PLC to predict strong fluctuations in local markets.
The Developing Markets Stock Indicator MSCI Inc. was down 0.5%, thus extending its fall to a second day. Meanwhile, the currencies receded; the Mexican peso, the Russian ruble and the Malaysian ringgit led the declines.
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The repercussions of the strengthening of the dollar
The advance of American dollar has sent Asian currencies to multi-month lows, while prompting authorities in Japan and China to strengthen your exchange rate defenses. China’s central bank supported the yuan and set the currency’s daily benchmark exchange rate with the largest bias against estimates in a Bloomberg survey.
“In our previous quarter, we said emerging markets were going their own way, but the recent move in US rates raises questions about how far they may diverge,” Barclays strategists led by Christian Keller wrote in a note dated June 25. Wednesday. “China’s problems and the impact of term premiums in the US. took emerging market assets on a roller coaster and created a difficult backdrop for emerging market flows”, while the upward swing in oil prices “has become difficult to ignore”.
What to expect for emerging markets
Deutsche Bank also announced a bearish outlook for emerging currencies.
“The market view on the outlook for emerging markets has become increasingly bearish and not just because of China,” macro strategist Oliver Harvey said in a note. “The biggest downward revisions to the emerging markets growth complex over the past month have come from South Asia and Central and Eastern Europe,” he noted.
On Wednesday, the Mexican peso fell for a fifth day, its longest losing streak since May.
after reaching $90 a barrel for the first time this year, Brent crude was trading 0.6% lower for the first time in seven days. Hardest hit by rising fuel prices will be poorer emerging markets, “where fuel purchases account for a large part of household consumption,” said Hasnain Malik of Tellimer.
Translated by Barbara Briceño.
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