Analysts at Rabobank note that with only a few days left it is safe to say that October proved to be a very good month for emerging markets.
- “Excluding the Argentine peso and the Turkish lira, virtually all EM currencies appreciated versus the broadly weaker dollar.
- In the CEEMEA space, gains were led by the Polish zloty (+4%) and the Hungarian forint (+3.7%), which benefited from growing market optimism that a hard Brexit could be avoided, although enthusiasm faded towards the end of the month when political uncertainty increased as a result of PM Johnson pushing hard for an early general election.
- Progress to avert the UK crashing out of the EU without a deal was not the only source of an improved sentiment towards risky assets as the prospect of an interim trade agreement between the US and China also boosted risk appetite.
- While we retain our bearish long-term view on the CEEMEA currencies, we have to acknowledge that in the coming weeks or perhaps even months the global environment may remain conducive for the EM assets. A fresh wave of capital inflows would lead to further currency gains.”