(Bloomberg) — Currencies and stocks in developing economies advanced Monday as sentiment for risk assets rebounded on speculation that the Federal Reserve will resume cutting interest rates.<\/p>\n
Most Read from Bloomberg<\/p>\n
MSCI\u2019s index for developing currencies rose 0.4%, notching the biggest daily gain in over a month, while a similar measure for stocks strengthened 0.9%. Investors are betting that the Fed may lower interest rates as soon as next month, with an upcoming change in its board and the firing of the US government\u2019s chief labor statistician adding to downside risks for the dollar.<\/p>\n
\u201cThe bearish USD thesis remains intact and, although there are grounds to think that the risk backdrop is about to get shakier, a weaker DXY will naturally support EM,\u201d wrote Morgan Stanley strategists including James Lord and Simon Waever, adding that their exposure to emerging market currencies is limited.<\/p>\n
Emerging-market currencies came off from Monday\u2019s session highs after US President Donald Trump threatened to hike tariffs on India above the punitive rate of 25% announced last week due to New Delhi\u2019s purchases of Russian oil.<\/p>\n
The $10-billion iShares MSCI India ETF dropped as much as 0.6%. Trump\u2019s post didn\u2019t specify by how much he would raise the levy.<\/p>\n
\u201cThose who thought that Trump might reconsider his tariff strategy once the negative impacts on the US economy became visible, are now being proved wrong,\u201d Thu Lan Nguyen, the head of FX and commodity research at Commerzbank AG, said in a note. \u201cInstead of facing reality, the US president apparently prefers sweeping the problem under the rug.\u201d<\/p>\n
Fed Moves<\/p>\n
Trump said he\u2019ll announce a new Fed governor in the coming days, in a move that may bring in a policymaker more closely aligned with his preference for lower rates. That space opened up after Adriana Kugler said Friday that she would vacate her board of governors seat, which wasn\u2019t due to expire until January.<\/p>\n
Trump will also announce the replacement for the Bureau of Labor Statistics\u2019 head in a move that is seen as potentially undermining the credibility of the institution\u2019s data.<\/p>\n
The Philippine peso was the best performers among peers, gaining about 1% against the dollar. Most other Asian FX markets also rose versus the greenback, with Goldman Sachs strategists expecting the South Korean won and Taiwanese dollar to outperform other EM currencies in the region.<\/p>\n
Story Continues <\/p>\n
\u201cIf the Fed resumes rate cuts in September and signals a more dovish policy stance, it could potentially offer support to Asian currencies,\u201d MUFG Bank\u2019s currency strategist Lloyd Chan wrote in a note. Risks for regional FX might come from the implementation of higher US tariffs that could weigh on exports, he added.<\/p>\n
Colombia\u2019s dollar bonds were among the best performers in emerging markets Monday after the government said it would buy back some of its outstanding global notes with cash in an effort to revamp its financing strategy amid concerns over its widening budget deficit.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Currencies and stocks in developing economies advanced Monday as sentiment for risk assets rebounded on speculation…\n","protected":false},"author":2,"featured_media":58605,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[44076,7904,28,44075,12,101,2800,9007],"class_list":{"0":"post-58604","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-asian-currencies","9":"tag-bloomberg","10":"tag-business","11":"tag-developing-economies","12":"tag-donald-trump","13":"tag-economy","14":"tag-federal-reserve","15":"tag-interest-rates"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/58604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=58604"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/58604\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/58605"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=58604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=58604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=58604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}