An Emerging Markets Currency to Keep an Eye On
This article was originally published on ETFTrends.com.
A stronger dollar has certainly tamped down demand for international and emerging markets in 2018, but a more dovish-sounding Federal Reserve could awaken these opportunities abroad, particularly in currencies. One little known currency to watch is the Polish zloty.
A low interest-rate environment has kept the zloty down, among other things, but analysts like PKO BP analyst Joanna Bachert don't think this will last. Bachert cites the ability of Poland to mute the effects of a broader EU economic slowdown as a reason to watch the zloty.
Data compiled by Bloomberg shows the zloty being the sole gainer in emerging markets currencies through the second quarter of 2019.
"We expect the data to confirm the local economy’s resilience to Europe’s slowdown," said Bachert.
Furthermore, Bachert posits that any more dovish tones by the Fed will "raise appetite for emerging-market currencies, including the zloty."
ETF Plays in EM
For investors looking for the continued upside in emerging market assets, whether driven by a weakening USD or continued developments around trade, the Direxion MSCI Emerging Over Developed Markets ETF (RWED) offers them the ability to benefit not only from emerging markets potentially performing well, but from emerging markets outperforming developed markets.
Conversely, if investors believe that resolutions to the big issues impacting sentiment today are in motion, the Direxion MSCI Developed Over Emerging Markets ETF (RWDE) provides a means to not only see developed markets perform well, but a way to access a convergence/catch-up in performance of DM relative to EM, a spread that has clearly widened over the past 6 months.
For more market trends, visit ETF Trends.
POPULAR ARTICLES AND RESOURCES FROM ETFTRENDS.COM
An Alternative ETF to Hedge Against Further Market Volatility
Indonesia ETFs Slip After Credit Suisse Downgrades the Developing Economy
A One-ETF-Fits-All Solution in Today’s Challenging Fixed Income Market
Fidelity Expands Its Commission-Free ETF Platform to Include Over 500 Options
Schwab ETF OneSource Doubles Lineup to 500+ Commission-Free ETFs
