Emerging Markets | FX | Global | Rates
• Real, rather than nominal, short-term yields matter for EM FX.
• Changes in yields are not correlating with EM FX, but curve steepness is.
• Biggest EM winners are those with high real yields, commodity exporting hawkish central banks, and steepening/least flattening curves like MYR, IDR, RUB, and COP.
We’ve seen large moves in rates, not only in G10 but also in EM. The question is whether EM FX is sensitive to such moves.
• Real, rather than nominal, short-term yields matter for EM FX.
• Changes in yields are not correlating with EM FX, but curve steepness is.
• Biggest EM winners are those with high real yields, commodity exporting hawkish central banks, and steepening/least flattening curves like MYR, IDR, RUB, and COP.
We’ve seen large moves in rates, not only in G10 but also in EM. The question is whether EM FX is sensitive to such moves.
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