Analysts at TD Securities (TDS) offer their outlook on the EM currencies and the main underlying theme impacting them this week.

Key quotes

“The trend remains for richer G-spread curves across the EM SSA spectrum. Both Asian and Latin American names exhibit a clear tendency in this direction, while this is less obvious in EMEA.”

“Spread cheapness is the starkest on the TRY curve, but this is mostly symptomatic of a distress situation with locals buying govies and not exploiting the cheapness of TRY-denominated SSAs.”

“In BRL and MXN, spreads continue to fall, and so they do in CNH and ZAR. In IDR and INR, spreads are roughly stable but at rich levels, with part of the curve flirting with or below the zero bound.”

“Finally, PLN saw sharp cheapening in G-spreads, but from very rich levels recently.”