The American currency has been gaining against
commodity currencies.
The Aussie and other
commodity currencies saw moderate underperformance, correlating with declines across global equity bourses.
This is a major support for EM
commodity currencies as demand for local currencies increases, the report said.
'We also expect SSA inflation, on average, to fall back to the single digits, owing to more stable
commodity currencies and improved food output in East Africa.
Commodity currencies are also enjoying a decent upside, after copper prices rallied to their highest level in almost four years.
Although the event didn't generate large volatility for the major five currencies, it happened to be a major episode for emerging market and
commodity currencies as we continue to witness lately.
The most prominent theme in the world currency market in the past year has been the spectacular rise of the US dollar against the Euro, the Japanese yen,
commodity currencies and above all, emerging markets.
Elsewhere, Asian shares stepped back from a two-month high on Tuesday and
commodity currencies retreated as a big fall in oil prices triggered profit-taking after a strong rally, though fading expectations of an imminent US rate hike lent some support.
This would translate to risks for more losses in the global markets, stretching as far as European equities, oil and
commodity currencies.
In the final Asian trade
commodity currencies nursed hefty losses on Friday as investors sent the Australian dollar to 5 1/2 year lows as they bet on the Australian central bank reducing interest rates when it meets this week.
"The sharp decline in nearly all commodity prices and the weakening in
commodity currencies creates headwinds for oil demand in the commodity producing emerging markets in Latin America and the Middle East.
The bearish Chinese data has added to worries about a 40 per cent slide in iron ore prices this year and further soured sentiment for
commodity currencies. The Australian dollar fell below 90 US cents for the first time since March, down half a per cent on the day and extending a decline from 94 cents early this month.
