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Currencies of the EM complex still appear vulnerable amidst rising USD and current account deficits, noted Arne Rasmussen, Chief Analyst at Danske Bank.

Key Quotes

“Recent EM developments spur the more wide-raging question of whether this is the start of a contagious crisis in the EM sphere”.

“In light of the amount of outstanding foreign debt and current-account deficits, apart from Turkey, notably Mexico, India and Brazil look vulnerable. That said, given the loss of momentum we see in US yields and USD appreciation, EM currencies should look into some relief shortly”.

“Further with risks still on the upside in notably oil prices, oil exporters should enjoy some support nonetheless, but TRY will likely be challenged still”.