Emerging-market currencies cap best streak since 2024
Published Sun, Aug 16, 2026 · 08:16 PM
EMERGING-MARKET (EM) assets rose on Friday (Aug 14) as a shift in the US interest-rate outlook added to bullish sentiment around artificial intelligence, pushing equities to cap the best week in nearly two months and sending a gauge of currencies on the longest streak of gains since 2024.
A string of softer US economic readings – including retail sales falling in July by the most in more than a year – helped fuel the gains, adding to evidence of cooling growth and inflation in the world’s largest economy. The figures weighed on on the dollar as investors saw less scope for further the Federal Reserve tightening monetary policy.
“July’s dismal retail sales report compounds the weak payrolls and soft inflation data,” said Elias Haddad, global head of markets strategy at Brown Brothers Harriman. “That run of data raises the bar for Fed tightening.”
MSCI’s gauge of EM equities rose 0.3 per cent on Friday, bringing its weekly advance to 2.6 per cent, the biggest since mid-June. Most of the move came during the Asia session, with milder moves in Latin America and US stocks falling amid concerns about US growth.
An index tracking developing-world currencies climbed 0.2 per cent to a fresh record. It’s the seventh straight weekly advance for the currency index, the best winning streak since September 2024. Most EM currencies appreciated against the dollar, with the Romanian leu, Taiwan dollar, Hungarian forint and Polish zloty among the top performers. The won notched its first advance in three days, supported by foreign inflows and a rally in South Korean stocks.
The Brazilian real was one of the few outliers, falling more than 1 per cent against the dollar during the session and extending its weekly decline as traders priced in election risk ahead of October’s presidential vote. The currency has lost more than 3 per cent against the dollar in August, while Brazilian equities have seen outflows from foreign investors. The real pared some of its losses later in the session to end about 0.6 per cent lower.
As investors dialled down expectations of US tightening, they renewed bets on the AI trade that has catapulted stocks to all-time highs this year, while also boosting volatility. South Korea’s Kospi index, which is dominated by tech names, led gains again, with AI heavyweights Samsung and SK Hynix climbing.
In credit markets, Ecuador bond was among the top gainers across emerging markets after the country’s debt score was upgraded by S&P Global Ratings. Indonesian bonds outperformed as well.
Still, developments in the Middle East remained in focus after the US threatened Iran with new economic measures, clouding prospects for a peace deal. Treasury Secretary Scott Bessent said on Thursday that the US would soon announce unprecedented economic measures against Iran, intensifying the Trump administration’s effort to force Tehran’s capitulation after almost six months of conflict.
Brent crude oil remained close to US$88 a barrel, rising about 1.6 per cent on Friday. BLOOMBERG
