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Analysts at Rabobank point out that Q2 was the worst quarter for emerging markets since the end of 2016 according to the data compiled by the Institute of International Finance (IIF).

Key Quotes

“Portfolio outflows from EMs accelerated to USD 8bn in June following USD 6.3bn outflows in May, the IIF reported.”

“Escalating trade tensions between the US and China, accompanied by the prospects of the Fed raising rates much faster than other major central banks and various idiosyncratic factors, prompted investors to reallocate their funds from risky assets to US stocks and bonds.”

“Outflows from EMs weighed heavily on EM currencies which weakened broadly against the US dollar throughout Q2.”

“That said, there are initial signals that the sell-off may have run its course, at least in the short-term, and we may witness more respite for EMs.”