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Rising up to the challenge

Weekly investor research

11 June 2018

Market sentiment remains cautious on Emerging Markets (EM), even though the rebound in the USD rally loses steam. A number of EM debt and currency markets have been under pressure, particularly in Latin America. In response, EM policy-makers have been actively trying to stabilise excessive FX volatility through a combination of intervention and interest rates hikes, where necessary. Last week, the Brazilian real (BRL) came under attack but the central bank’s actions have provided a respite. Details of the IMF support package for Argentina were announced and exceeded expectations. The recent decisions of the central bank of Turkey have helped the Lira (TRY) turn the corner and out-perform last week. The Reserve Bank of India (RBI) also hiked interest rates. In the rest of the world, a tense G7 meeting in Quebec showed the degree of frustration at President Trump’s unilateralism among non-US participants. A number of important events and central bank meetings will shape sentiment before the World Cup gets under way.

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