EM FX Daily Report

Emerging Market FX is facing headwinds from geopolitical instability in the Middle East, stalling Iran negotiations, and political shifts in Turkey. Traders are focusing on fading USDZAR rallies and managing carry trade exposures in KZT and TRY.

Key Takeaways

• 1.Geopolitical tensions in the Middle East and stalling US/Iran negotiations are creating risk-off sentiment across EM FX, particularly affecting HUF, ZAR, and ILS.
• 2.SARB is expected to implement a 25bps pre-emptive rate hike to address economic impacts from Middle Eastern conflict.
• 3.Short positions in USD/TRY are being reduced due to political developments and a reduction in the total carry trade volume to approximately $20bn.

Table of Contents

• Russian Ruble (USD/RUB)
• South African Reserve Bank (SARB) and ZAR
• Turkish Lira (USD/TRY)
• CEE FX and Iran Negotiations
• Hungarian Forint (EUR/HUF)
• Unnamed FX Pair (Spot 5.24)
• Israeli Shekel (ILS)
• Kazakhstani Tenge (KZT)

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