July 14, 2022 12:45 GMT
- In the past two months, the deterioration in the economic outlook (particularly in the Euro area) combined with the geopolitical risks have been weighing significantly on the Euro, which is down over 7% against the US Dollar since the beginning of June.
- The Euro weakness has also been weighing on the CEEMEA currencies, which have been very sensitive to the Russia/Ukraine dynamics.
- This chart shows the performance EM FX relative to the single currency since the start of June.
- Interestingly, the CZK has remained strong in the current environment, as it seems that the new CNB board is more keen on protecting the exchange rate via FX interventions (than hiking interest rates) in order to counter the elevated inflationary pressures.
- Asia FX have also been appreciating sharply against the Euro, with HKD (as 'pegged' to the USD), CNY and MYR being the top performers up 7.2%, 6% and 5.7%, respectively, against the Euro.
- At the bottom, CLP has been the worst performing EM FX so far, down 12.3% against the Euro, partly driven by the sharp depreciation in copper.