A surging US dollar and a “confluence of bad news” have sparked the biggest sell-off in emerging market currencies since the early stages of the Federal Reserve’s aggressive rate-raising campaign two years ago. A JPMorgan index of EM currencies has fallen more than 5 per cent over the past two-and-a-half months, putting it on course for its biggest quarterly decline since September 2022.
The latest fall puts JPMorgan’s EM currency gauge on course for its seventh annual decline in a row. Analysts said weakness in the Mexican peso could be attributed in large part to tariff developments. But the picture is more complex for a number of other EM currencies, with some also coming under pressure from country-specific challenges, they added. “There’s been a confluence of bad news in the emerging markets,” said Thierry Wizman, global foreign exchange and rates strategist at Macquarie.