The Federal Reserve's interest rate hike is expected to cool emerging market currencies to record highs

On 17 August, emerging market currencies rose to record highs, stimulating demand for venture assets, as a result of the market ' s expected cooling of the Fed ' s interest rate hike. The index for tracking emerging market currencies rose by 0.2 per cent a week, to 1906.98, touching a record high; the emerging market equity index also rose by 0.6 per cent. The weakening of United States economic data weakened the market ' s expectations for further tightening of the Fed ' s policy, and the weakening of the United States dollar supported the rise in emerging market assets. Wee Khoon Chong, a senior Asia-Pacific market strategist at the Melon Bank in New York, says: “The emerging market currencies are today being supported, driven mainly by the weakening of the dollar and the continued rise in stock market risk. We have seen a re-emergence of external capital flows to emerging markets, particularly in Asia.” According to Galvin Chia, the emerging Asian strategist of the Bank of France, “the Asian currency seems to have benefited from the weakening of US data last week and the weakening of the dollar at the beginning of this week. The lack of new geopolitical information on weekends, as well as the price of Brent crude oil below $90, may also support the market, which appears to be at the end of the summer season.” Kim Xian