WHATS ON IN EMERGING MARKETS

PATIENT FED HELPS THE RAND

EMERGING markets’ recovery was set to extend further after the downbeat tone that was presented by the Federal Reserve (Fed) following its latest monetary policy meeting, economists said yesterday. On Wednesday Fed chairperson Jerome Powell strongly indicated that interest rates would remain on hold for some time and that it ultimately appeared that the Federal Reserve would extend its narrative around the need for “patience” over the coming months. The move by the Fed gave the rand some reprieve as the local currency gained 1.9 percent against the dollar and 1.2 percent against the Euro to trade at R14.22/$ and R16.26/€. Jameel Ahmad, global head of currency strategy and market research at forex firm FXTM, said pushed-back US interest rate expectations would be enough to fuel some unwinding of dollar positions from a greenback that remains at historically high levels. Ahmad said the immediate reaction would be that this benefited the likes of the euro and Japanese yen. “Weakness in the dollar will also prove supportive to gold, but where I see the real opportunities for investors are in emerging markets. This includes both emerging market stocks and emerging market currencies,” Ahmad said. “Returning investor capital and inflows into emerging markets is a trend that will increase in popularity throughout the developing world and across different continents. This will stretch across the likes of China, South Africa and Saudi Arabia. We should also not discount the momentum that emerging market currencies should be able to build.” – African News Agency (ANA)