Emerging market currencies strengthened
Emerging market currencies strengthened last week at the maximal pace since 2008. Since the beginning of the week index of emerging market currencies rose by 3.2%.
Russian ruble showed the biggest gains as it rose versus the US dollar by about 7%. Malaysian Ringgit and Indonesian Rupiah also showed significant growth as they gained by 6-8%. Emerging market currencies strengthened as investors’ expectations of the US Federal Reserve rate hike have weakened.
In the beginning of September, futures priced in 60% possibility of a rate hike by December, in October these odds decreased to 39%, and many investors refrained from investing in the US dollars. Lower bets for the US dollar provided support for emerging market currencies.