'US dollar has crossed the Rubicon': Fund managers remain bullish about prospects in emerging markets despite greenback rally

Dollar strength to continue

Fund managers remain optimistic on the outlook for emerging markets despite the sharp rise in the US dollar, pointing to structural reforms in the region, continued strong global growth and greater local currency issuance.

In the week ending 4 May, emerging markets sold off following a rally in the dollar, with the Dollar index (which tracks the greenback against the euro, yen, sterling and six other currencies) hitting its highest level since December 2017 at 93.280 last Tuesday. In the same week, the MSCI Emerging Markets index slumped 1.7%, while the Bloomberg Barclays Global EM Currency Government Debt index fell 0.8%, marking its fourth week of losses. Elsewhere, the JP Morgan Emerging Markets Currency index dropped 1.7% to a one-year low at 66.954, its worst week since President Donald Trump was e...