FXStreet (Guatemala) – Analysts at Brown Brothers Harriman explained that it has been a bitter start of the week for EM.
Key Quotes:
“It’s hard to imagine either stabilisation or meaningful differentiation in EM until asset prices in major markets find a bottom. Also, the second leg down in commodity prices will keep fundamental pressure elevated for the exporters. Russia, Malaysia, Mexico, South Africa, and Brazil will be the barometers for this. Some have noted the break above the USD/CNY 6.40 level as meaningful, but we don’t read too much into it.”
“The Chinese yuan is doing what officials said it would do: there is more volatility but no large moves. Markets will probably remain in defensive more for some time. While the price action is starting to look a exaggerated, the risk-reward for betting on a reversal looks better in the DM space than in EM.”
(Market News Provided by FXstreet)