Emerging-market currencies are poised to outperform peers in developed markets, as attractive valuations lure investors, according to Wells Fargo & Co.’s Brendan McKenna.

“We are certainly forecasting emerging-market currency strength,” McKenna, a currency strategist at Wells Fargo in New York, said in a Bloomberg TV interview on Monday.

Latin American currencies are expected to do better, due to elevated real interest rates and local developments such as a more stable political environment, he said. Meanwhile, Asian currencies will underperform as China’s economic rebound after the end of Zero-Covid policy loses steam.

Some key takeaways from McKenna:

• Odds of Turkish President Recep Tayyip Erdogan to retain office is much higher as the nation heads into a runoff
• Argentina’s peso will probably be devalued after election and reach an all-time low because the central bank has run out of reserves; its credibility has been lost from a policymaking perspective

This week’s Emerging Markets Week Ahead column did a deep dive into how some of the world’s biggest investors are calling for a rally in emerging-market currencies.

Click here to sign up for the Emerging Markets Week Ahead feature published each Sunday. This week’s latest: Amundi to Abrdn See Emerging-Market Currencies on Cusp of Rally

Author: Karl Lester M. Yap