On a related note, emerging
market currency appreciation can be both a great source of returns and diversification.
Not exact matches
Over the longer term, we expect increasing productivity should also result in a broad
appreciation in emerging -
market currencies.
But there is a «sweet spot» of ongoing dollar
appreciation for EM
currencies and
markets.
The
appreciation of the Australian dollar has been less marked against the euro, and the
currencies of a number of countries that Australia competes with in international
markets.
You'll notice that many of the YTD returns are different when adjusted for local
currency appreciation or depreciation and the relative devaluation of various emerging
market currencies is another theme that has come to the fore in 2014.
Currency impact can be managed by hedging local currencies back into U.S. dollar, allowing investors to potentially earn local market yields and take advantage of potential local bond price appreciation, with less currency fluct
Currency impact can be managed by hedging local
currencies back into U.S. dollar, allowing investors to potentially earn local
market yields and take advantage of potential local bond price
appreciation, with less
currency fluct
currency fluctuations.
The global investors continue to be attracted to this particular
market due to the anticipation of
currency appreciation and the exposure to Chinese credits.
Depending on which countries you include in the analysis, the expected real exchange rate
appreciation in a basket of emerging
market currencies should be about 50 bps annually.
Total Return from
currency appreciation, implied yields of Emerging
Markets currencies, and income generated from U.S. money
market collateral securities
Just as emerging
market downturns tend to coincide with periods of weakening EM
currencies, bull
markets in emerging
markets are inclined to feature corresponding
appreciation in EM
currencies.
Our core
currency (FX) exposure positively contributed as well, in spite of USD
appreciation as our JPY exposure benefitted amidst a flight to quality on the heels of renewed equity
market volatility.