Search for yield to hold EM debt steady
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A MODERATELY more hawkish Federal Reserve, which on Wednesday opened the door wider for a December rate hike, will perhaps stall a recovery in emerging market currencies.
But the global search for yield will most likely keep dollar-denominated emerging market debt from retreating in price substantially.
After falling over 15 per cent this year, emerging market (EM) currencies rallied in October roughly 5 per cent as market probabilities of a 2015 Federal Reserve (Fed) hike retreated, and the multi-year US dollar rally stalled as a consequence.
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