Corrective rally in EM currencies continues

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 18, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Mumbai) - Emerging Market (EM) currencies advanced on Thursday and have strengthened further today after the Fed hiked rates by 25 bps as widely expected.

    The USD/INR is down 0.1%,while the USD/ZAR is down 0.60%. The Malaysian Ringgit is also up 0.70% against the USD.

    EM currencies, especially of the nation’s running trade deficit and having USD indebtedness, came under pressure in anticipation of a US interest rate rise throughout this year.

    The corrective rally witnessed yesterday and today appears to be a part of the “buy the rumor, sell the fact” trade. However, the Fed has signaled four more rate hikes in 2015 (which markets did not anticipate) and thus the sell the fact trade may not last long enough.
    For more information, read our latest forex news.

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