Emerging Currencies Are in ‘Sweet Spot’ for Carry Trades Again
- Next wave of rate meetings may separate winners from laggards
- Powell’s Jackson Hole speech lays ground for extended rally
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Central banks in developing nations will take center stage this week as assurances that the Federal Reserve is in no hurry to raise interest rates lay the groundwork for an extended rally in emerging-market currencies.
Policy makers in Poland, Russia, Peru and Malaysia are all due to set borrowing costs, safe in the view that U.S. rates will remain low for longer, a message that Fed Chair Jerome Powell hammered home at Jackson Hole. And it means that any hawkish turn in emerging markets could bring the carry trade back into play, supercharging gains, as was the case for the Chilean peso last week.