Rising US Treasury yields to prompt EM FX sell-off by end-June – Reuters poll

The relentless surge in the US Treasury yields risks a sell-off in the battered emerging market (EM) currencies in the next three months, the latest Reuters poll of 53 FX strategists showed on Thursday.

Key findings

“When asked about the likelihood of a sell-off in emerging market currencies in the next three months, nearly 60% of 53 FX strategists who answered an additional question said likely, including six who said very likely.”

“The lira, which plunged to a near all-time low last week after President Tayyip Erdogan replaced a hawkish central bank chief with a critic of high-interest rates, was set to fall about 1% to 8.41/$ in the next 12 months.”

“The Chinese yuan, the most actively-traded emerging market currency, was predicted to gain 2.7% to 6.40 per dollar in 12 months.”

“India’s rupee, one of the best-performing EM currency so far in 2021, was expected to turn worst-performing among its peers.”