Finding the Real Hawks Is Key to Picking Emerging-Market Winners
- Peso, real and forint head pack as currency gauge rebounds
- While Fed stays put, rate hikes will protect yield advantage
Photographer: Mauricio Palos/Bloomberg
The race to the top of the emerging-market currency pack will be determined by central banks that are taking no chances with inflation. The trick is singling out those ready to turn rhetoric into action.
Recent winners are the Mexican peso, Brazilian real and Hungary’s forint -- currencies whose central banks raised rates this month, protecting their relative yield advantage against accelerating prices and the prospect of rising U.S. rates. The Russian ruble outperformed most of its peers on Monday after Bank of Russia Governor Elvira Nabiullina said the monetary authority could consider a rate increase in July. Attention now turns to Colombia, Turkey and Poland, where policy makers are due to set benchmark borrowing costs over the coming weeks.