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Emerging currencies may fall 10% on US debt standoff – UBS

By Srinivasan Sivabalan

UBS recommends investors hedge against currency devaluation in emerging markets such as Brazil in the face of the impasse over the US debt ceiling, even if a deal is reached in time to avoid a technical default.

But if the fiscal disagreement between Democrats and Republicans in Washington drags on, developing country currencies will likely fall as much as 10% after a strong start to the year, the Swiss bank strategists warned.

With high carry trade costs - the strategy of taking money in low-interest markets and investing in others with higher rates - and new concerns about . . .

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