A gauge that tracks emerging-market foreign exchange fell 0.1%, with Eastern European currencies leading the laggards. The Polish zloty was the worst performer among the basket, shedding as much as 0.9%.
Latin America’s currencies, however, bucked the weakness alongside with the South African rand, which climbed due gold prices soaring.
“Latam currencies are outperforming today against other EM FX on the back of improving global risk sentiment amid stable US equity and bond markets for now,” said Bernd Berg, a London-based strategist at In Touch Capital. “The positive global risk backdrop is triggering fresh demand for higher yielding EM FX for now, we have to see how long this lasts.”
Earlier, the ringgit slid as the US set new duties of 34.4% on solar imports from Malaysia, while the offshore yuan dropped by the most in over a week against the dollar. The cost to
borrow the offshore yuan in Hong Kong plunged to the lowest since data became available in 2013, making it cheap for speculators to bet on further weakness.
The International Monetary Fund said the latest escalation in the tariff conflit risks saddling China and the US with damages that would only get worse after this year, trimming its projections for China’s growth to 4% for both this year and 2026, according to the fund’s World Economic Outlook released Tuesday.
The IMF anticipates a global growth around 2.8% for 2025. In January, the fund predicted that the world economy would expand 3.3% both this year and in 2026.
Meanwhile, the stock market erased earlier losses with South Korean stocks boosting the index. The MSCI equities gauge gains 0.08%.
Over the last days, an expectations of interest-rate cuts in developing nations alongside with a dollar weakness and sliding oil prices have allowed emerging-market assets to hold
up relatively well in the face of global turmoil unleashed by President Donald Trump’s trade war. Investors are on edge, however, given the risk of a US recession and Trump’s criticism
of the Federal Reserve.
“I feel that EM/LATAM and equities have concerns over the stability of the U.S. since Fed’s independence is key to keeping a steady hand,” said Juan Perez, a foreign-exchange trader at Monex.
Regarding the emerging bond market, Ukrainian sovereign debt outperformed its peers as officials from Kyiv, the US and European allies prepared to hold more talks on halting the conflict with Russia. Notes maturing in 2034 jumped almost 2 cents on the dollar. The country and the holders of debt instruments with payouts linked to economic growth are starting talks to restructure a payment due next month.
