Emerging market currencies to bounce back from trade war jitters - Reuters poll

The ongoing rout in the Emerging Market currencies (EM), in the wake of the US-China trade war, is likely to stall and the battered EM currencies could stage a comeback, the latest Reuters poll suggests.

Key Findings:

“Foreign exchange strategists polled this week are optimistic that by this time next year, most will have recouped those losses.

But risks remain for currencies of commodity exporters inextricably linked to China.

The Reuters poll last month suggested these currencies had probably seen the best of a lukewarm year against the dollar as U.S. President Donald Trump was then expected to back-pedal on his conciliatory tone from the recent G20 summit.

Local problems in some countries have become more pronounced too, exposing deep structural problems irrespective of the global backdrop. In South Africa, President Cyril Ramaphosa is faced with serious fiscal troubles, while in Brazil, growth is expected to slow in 2020 despite pension reforms.

Though forecasters expect the rand to recover its recent losses, it remains a currency easily beaten down in times of heightened risk aversion, despite the fact its gold mining companies often benefit in times like this.

The beaten-down Turkish lira will struggle over the next 12 months.

The year ahead outlook for the yuan still showed it could rise as much as 11% in the next 12 months.”