The Emerging Markets Report – February 2021
By
Daria Parkhomenko & Daniel Rico
Published February 11, 2021
|
4 min listen
A monthly audio series where our experts sit down and discuss current trends, investment strategies, and government policies in emerging markets around the world.
This month, Daniel Rico and Daria Parkhomenko sit down to discuss the relationship between US financial conditions/EM credit spreads and EM FX.
- The easing of global financial conditions and the ample liquidity provided by the Fed and other central banks have driven a large divergence between financial asset prices and the real economy, with the global hunt for yield resulting in EM FX appreciation in Q4 2020.
- With financial conditions already very easy by historical records and EM credit spreads getting tighter, this raises questions about the sustainability of EM FX appreciation. Thus, in this podcast, we discuss the relationship between US financial conditions/EM credit spreads and EM FX.
- Based on our analysis, in the event of a sudden tightening in US financial conditions driving EM credit spreads wider, we would expect commodity producers, in particular LatAm, to underperform currencies which are less sensitive to changes in US financial conditions (e.g. Asia EM).
View audio transcript
Daniel Rico
Emerging Markets FX Strategist, RBC Capital Markets
Daniel Rico is an Emerging Markets FX Strategist at RBC Capital Markets. Before joining RBC, Daniel worked at Goldman Sachs as a Fixed Income Strategist and Structurer and previously worked as an industrial engineer for a U.S. power company and in a trading firm for the Colombian Mercantile Exchange in Bogota. Daniel has a Masters in Financial Mathematics from the University of Chicago, a Masters in Industrial Engineering from the University of Wisconsin and a BSc from the Universidad Nacional de Colombia.
Daria Parkhomenko
Daria Parkhomenko
FX Strategist
Daria (Dasha) Parkhomenko, CFA, is an Associate in FX Strategy at RBC Capital Markets, focusing on EMEA and based in New York. Daria has a B.S. in Business Administration (Finance & Accounting) from Georgetown University.
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