Emerging market currencies are poised for their best week in over 17 years as investor concerns eased following the release of the U.S. Federal Reserve’s minutes from last month that indicate an interest rate hike in 2015 is not likely.
This week, a Bloomberg index that tracks the performance of emerging market currencies has risen around 3.3 percent, after suffering its biggest quarterly loss since 2011.
So who were the biggest winners on the week?
Indonesia’s rupiah, Russia’s ruble, and Malaysia’s ringgit spiked over 7 percent against the dollar, according to Bloomberg data.
The benchmark MSCI emerging market index is also prospering, as it is headed for the best week in nearly four years with global funds pouring in around $1.2 into such funds, according to Bloomberg.
Since October 2, Indonesia’s rupiah has spiked around 9.4 percent versus the dollar, Russia’s ruble jumped about 8.1 percent, Malaysia’s ringgit strengthened close to 7.7 percent, and Colombia’s peso rose 5.2 percent, according to Bloomberg.
What Are the Odds of a U.S. Rate Hike in 2015?
According to Bloomberg, interest rate futures are pricing in around a 39 percent chance of a hike by December, which is down from 60 percent in September, following the release of the minutes of the Federal Reserve’s latest policy meeting which showed that officials are concerned over China’s slowing growth in addition to the risk of a strengthening dollar which is weighing on U.S. exports.
However, on Thursday, PIMCO — whom oversees around $1.52 trillion of assets — cautioned investors and warned that emerging market currencies were likely to come under renewed pressure, and said that they are favoring investments that will gain from their losses.