Chart Of The Week    October 6 2023

Global Risk-Off Sentiment Weighing On EM Currencies

EM currencies have gotten caught up in the risk off sentiment across global financial markets. The JP Morgan Emerging Markets currency index has fallen to a new record low amid the US dollar’s ongoing appreciation. While the EM currency index has been on a downtrend since early February, the latest bout of weakness is more broad-based. Latin American currencies – which earlier in the year had been strengthening – are reconverging with EM Asian FX, which have been weakening all year. In particular, the Mexican peso and Brazilian real – the best performing major currencies in the first seven months of 2023 – have become the two worst performers.