Goldman, JPMorgan Pin Emerging-Market Bets on Hawks Beating Fed
- Tightening expectations support developing-nation currencies
- Rally on track with U.S. financial conditions loosest ever
Photographer: Vanderlei Almedia/AFP/Getty Images
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Emerging-market currencies hit by a hawkish Federal Reserve may soon regain their record run against the dollar on expectations that developing central banks may outpace their U.S. counterpart in policy tightening.
The currencies of Brazil, the Czech Republic, Hungary and Poland -- countries that delivered multiple rate hikes or are expected to do so soon -- are retaining quarterly gains and outperforming peers. In comparison, the Fed has signaled it’s likely to lift interest rates only in 2023. Goldman Sachs Group Inc. and JPMorgan Asset Management say that once the dollar’s support from a positioning shift fades, emerging-market currencies could once again roar back.