Mixed outlook for emerging market currencies — survey

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Investors expected to trade cautiously in risky currencies in 2019 with the rand likely to remain relatively steady at 14.30/$ in six months

A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey. Picture: REUTERS/MURAD SEZER

Taken in the past week, the survey showed a mixed outlook for emerging market currencies, as Brazil’s real is expected to firm up more than 4% to 3.7/$ while SA’s rand remains relatively steady at 14.30/$ in six months. A similar survey in September expected many emerging market currencies to bounce back at least partially against the dollar this year as weakening growth momentum took the shine off the greenback.

For the trade to work liquidity needs to be plentiful, the global economic backdrop benign and, importantly, currency volatility next to nothing. A separate Reuters poll at the end of March suggested the Fed is done raising interest rates until at least the end of next year, according to economists in a Reuters poll who gave a 40% chance of at least one rate cut by end-2020.

 

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