Emerging-Market ETFs Feel Currency Pressure

As the U.S. economy sputters, and with it the nascent recovery in the manufacturing sector, the current price action in developing-market currencies bears watching. For example, the Chinese renminbi has actually fallen against the U.S. dollar year to date. With the Indian rupee in free fall and the Brazilian real under continued selling pressure, the global competitive currency devaluation game is back with a vengeance.

RMB Weekly Bloomberg View Chart » View in New Window » BRL Weekly Bloomberg View Chart » View in New Window »

It was only in early March that Brazilian authorities were trying to jawbone the real lower, as an abrupt slowdown in Brazilian exports begin to raise concerns of an economic contraction. With at least another 100 basis points of easing priced into the Brazilian curve, the real is now having a hard time stabilizing near the 2.03-2.07 range. The real has now fallen more than 11% against the U.S. dollar year to date, and it's down a whopping 23% from those March lows. Although the purchasing manager index recovered above the 50.0 level earlier in the year, indicating ever-so-slight growth, the diffusion index has rolled over and is heading lower....303 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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