Emerging economies struggling with low commodity prices and a strong U.S. dollar could soon expect some reprieve thanks to central banks and steadying oil prices, analysts say.
This week has seen the U.S. dollar weakening after the Fed reinforced expectations for two interest rates increase this year and the Bank of Japan left rates unchanged. The oil prices are also seen to be steady after setting a 2016 high on Thursday as traders locked in profits.
Nandini Ramakrishnan, global macro strategist at JP Morgan Asset Management told CNBC Thursday that this could mean the emerging markets are going to see better times?
"If those lack of headwinds remain, then you have an emerging market complex that, if you are selective about it and you pick the companies that have an earnings growth forecast, which they haven't had across the board for much of them, then you do have a good play, valuations wise for emerging markets," Ramakrishnan told CNBC.
The strong U.S. dollar has remained a massive risk for emerging market currencies. The trend started in late 2014 when the Fed finally decided to end its bond-buying program, leading to the formation of 'Fragile Five' – Indonesia, Brazil, Russia, Turkey and India – countries with weak currencies. Domestic factors such as policy paralysis also played a role but the dependence on the Fed policy continues to dominate.