The FEAR is Back!

The FEAR is back!

Emerging market currencies:  Argentina, Brazil, India, Indonesia, Turkey, South Africa are hit as the Fed continue its rate path and Dollar strengthen further.

Overall, the MSCI Emerging Markets Currency Index declined 0.46% on Tuesday — the biggest drop in two weeks. Since the start of the year, it has fallen 5.53%.

Despite fears of emerging markets contagion growing, analysts said investors should not panic simply on negative sentiment.

Karine Hirn, a partner at asset manager East Capital, said that the stress can be partly attributed to a strong dollar and rising oil prices, but the real issue is trader sentiment.

“Let’s not forget that, in general, emerging markets are really exposed to sentiment issues because a lot of investors are from overseas and not necessarily domestic investors. And the sentiment is definitely hurt by these trade tensions around the world,” she told CNBC’s “Squawk Box.”

Reference

CNBC, Weizhen Tan, 2018-09-05, “Emerging Market Currencies Keep Tumbling, But Experts say Fears of Contagion May be Overblown”