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  • This year, the USD has been broadly stronger against most of the currencies despite a rising number of EM central banks hiking rates to curb the inflationary pressures.
  • Not surprisingly, the TRY is the worst performer this year, down nearly 20% against the USD, amid rising political and economic uncertainty, especially after the CBRT decided to cut its benchmark rate by 1% last month to 18%, which sent the Lira to new all-time lows.
  • It is interesting to see that the ZAR is nearly unchanged against the USD this year despite a 'quiet' SARB, while the CLP is down over 13% even though Chile central bank has raised rates by 225bps (the third most 'aggressive CB in the EM world).
  • High real interest, strong current account have been strong drivers of ZAR, in addition to the fact that the rand is also a 'risk on' currency that generally performs well in periods of low volatility.
  • The best performing currency in the EM world has been the RUB, up over 4% this year against USD, which has mainly been driven by the firm trend in oil prices.

Source: Bloomberg/MNI