More warnings signals for the CEEMEAs – Rabobank

Piotr Matys, EM FX Strategist at Rabobank, suggests that they remain of the view the selling pressure on other CEEMEAs is likely to rise as well in current global environment even as this month only the Turkish lira and the Russian ruble have weakened against the US dollar (4.8% and 2% respectively) in the CEEMEA region.

Key Quotes

“Supported by rising demand for US Treasuries, the US dollar may gain a better traction against the CEEMEA currencies.”

“We are also monitoring closely the MSCI EM Stock Index. A break below the upside trendline would be an indication that capital outflows from risky assets are likely to accelerate, which would weigh on the CEEMEA currencies.”

“While the Turkish lira is still the most vulnerable, its peers may not be able to resist much longer pressure coming from rising risk aversion as reflected in the sharp fall in US Treasury yields and the sell-off in global stocks.”