A RISKY END TO THE SUMMER IN EMERG-ING MARKETS

Edito The summer period was marked by resumed trade tensions be-tween the United States and the rest of the world with the highlight of the diplomatic and trade crisis with Turkey in mid-August. In an environment like this, the currencies of the most fragile emerging market countries (high current deficit and inflation, political risks, etc.) such as the ZAR, the BRL and the RUB underwent significant correction. The other emerging market currencies showed some resilience but could be under pressure after Labor Day given the persistence of global risks including the increase in oil prices, which is a penaliz-ing factor for importing countries like India. In addition, the lack of a policy interest rate hike in Turkey (meeting on September 13) will maintain the volatility of all emerging market currencies. Likewise, uncertain elections in Brazil in October are also a source of worry for the markets that is likely to weigh on the other currencies of Latin America, in particular if the Argentine and Venezuelan crises deepen. Finally, in coming weeks, D. Trump intends to reinforce the cus-toms tariff war with China, even with the European Union, which is enough to maintain capital outflows from emerging market coun-tries and to weight on all emerging markets.