At a time when the U.S. Federal Reserve has well and truly capitulated on its hiking path, some emerging markets are not showing signs of relief.
Argentina's peso is close to an all-time low, the Turkish Lira is teetering close to its year-to-date low again and the South African rand is creeping back to December levels.
Where would those currencies be in a world where the Fed was still tightening, dare I ask? A higher interest rate in America is seen as detrimental for emerging markets as U.S. investors bring their dollars back home with the higher yields.
A dovish Fed may have taken the pressure off emerging markets, but investors have now become more attuned to the mantra that not all of these economies are cut from the same cloth. In fact, the currencies that have suffered this year are not only the countries with high external dollar liabilities, but also happen to be the ones facing the softest growth conditions.