Posted 12/17/2023, 1:00:00 PM
Falling Oil Prices Boost Emerging Market Assets, With More Central Bank Easing Ahead
- Falling oil prices will reduce inflation further in emerging markets, providing support for EM bonds and currencies
- EM local currency debt and currencies have rallied recently due to optimism over Fed interest rate cuts
- Several EM central banks have already started cutting rates, with over 500 basis points of cuts in Brazil, Chile and Peru
- Declining oil prices will benefit EM net oil importers like India, Philippines, Korea and Thailand
- The US becoming a net oil exporter means lower oil prices now tend to weaken EM currencies, unlike in the past