Dubai. Two opposing forces are at play in emerging markets. The first is excitement over the dollar’s decline as speculation grows that the US will cut rates soon. And the second is dread over President Donald Trump’s trade war.
While Mexico averted the start of new tariffs, Washington’s campaign to shake up trade agreements worldwide is still wreaking havoc on global economies. But the impact of Trump’s unpredictable tweets will probably be less detrimental on emerging assets if the dollar’s slide last week, the worst against a basket of currencies since February 2018, proves to be a trend.
“Broadly we remain constructive on emerging-market debt,” said Paul Greer, a London-based money manager at Fidelity International, whose emerging-market debt fund has outperformed 97 per cent of peers this year after reducing risk in the first quarter. “We now see some opportunities re-emerging after a tough last three to four months for EM currencies.”
Developing-nation local-currency bonds capped an eighth day of gains on Friday, the longest winning streak since January 2018.