Fed rate decision: The no-hike scenario for EM assets
- Take a look at our dedicated rate hike page for other scenarios
This is the most bullish scenario for emerging-markets forex and emerging-markets assets. That is a dovish stance that fails to deliver a hike but maintains a glimmer of credibility which will heap pressure onto dollar.
The USD debt burden held by emerging-market countries will remain unpressured in the low rate environment and the search for yield by investors will be re-ignited.
In this environment carry trades should perform and emerging-market currencies will be bolstered portfolio inflows into EM assets.
- Sell USD against emerging markets:
- Sell USD/IDR 1 Month NDF at market. Target 12,950.
- Sell USD/KRW 1 Month NDF at Market. Target 1,125.
Editor's note: Please look at our dedicated rate-hike page for other scenarios that could result from the December meeting of the Federal Open Market Committee.
— Edited by Adam Courtenay
Non-independent investment research disclaimer applies. Read more