Global EM Weekly Worsening technicals backdrop compound challenges for EM FX

EMERGING MARKETS 09 October 2026

Note to our readers: The Global EM Weekly will resume publication on 23 October, after the IMF Meetings in Bangkok.

EM Weekly Extract from a report

Global EM Weekly Worsening technicals backdrop compound challenges for EM FX Phoenix Kalen Highlights  Market themes: Worsening technicals backdrop compound challenges for EM FX. EM Kiyong Seong assets face a less supportive portfolio flows backdrop, with Asian equity outflows and moderating EM debt inflows. Simultaneously, rising US rates volatility likely poses a greater transmission risk Marek Drimal than currently subdued EM credit volatility suggests. We note that although year-end de-risking could trigger carry unwinds in crowded high-yielding markets, the recent broad-based EM sell-off has likely reduced positioning imbalances. Gergely Urmossy  Trade updates. o Initiating short EUR/BRL trade position (rationale in LATAM Strategy Updates) Galvin Chia o Initiating short USD/BRL trade position (rationale in LATAM Strategy Updates) o Extending Target and tightening Stop on short EUR/IDR 3m NDF trade position to lock in profit Brendan McKenna  ASIA. USD/CNY has broken below 6.70 and is likely to grind lower towards 6.60 over the coming months. The KTB 10s30s curve has flattened sharply, supported by reduced KTB Juan Orts issuance. We expect the bullish flattening bias in Korea rates to persist until December. Meanwhile, USD/KRW appears to be entering a period of range-bound trading. We expect Singapore’s MAS to slightly steepen S$NEER slope next week, which should keep the basket Hajar Boulfoul supported into the meeting. India’s FX carry looks exceptional, but spot price action is becoming disorderly again; we maintain short EUR/INR and watch stops closely. For Indonesia, constructive price action sees us extend our short EUR/IDR 3m NDF target to 20,000. om CEEMEA. In Poland, the NBP kept rates unchanged at 3.75%, as widely expected. Governor Contents Glapinski sounded relatively dovish, but did not close the door to a hike in November. We Highlights...........................................1 continue to expect two interest rate increases over the coming months. EM Strategy cheat sheet ....................2 Juan Orts EM trade idea monitor .......................5 +4420 7676 LATAM.8210 September CPI reinforce diverging monetary policy trends across Latin America. Soft Market themes – Worsening CPI in Chile and still elevated price growth in Colombia lead us to believe there is still value in technicals backdrop compound challenges for EM FX ..........................6 short CLP/COP. Additional dovish commentary out of Mexico keeps us bearish on MXN, and while Asia Strategy Updates .....................10 short-end TIIE may remain anchored, we continue to stress caution in receiving TIIE during a Fed CEEMEA Strategy Updates ...............17 tightening cycle. Flavio’s first round surprise win clears the path to a more optimistic near-term LATAM Strategy Updates .................18 outlook on Brazilian financial markets. We initiate short USD/BRL and short EUR/BRL to capture Frontier Markets Strategy Updates .21 political momentum leading into the runoff. In Peru, BCRP keeping rates on hold should Global EM previews .........................26 Forecasts: rates & currencies...........30 contribute to additional depreciation pressure on the Peruvian sol. SG EM Econ Releases Calendar........31  FRONTIER. In Egypt, we expect urban CPI inflation to slow to 13.9% yoy in September, implying average inflation of around 12% in FY2026/27. We continue to see Brent crude prices as the key driver of the USD/EGP, and maintain our forecast for USD/EGP at 50, consistent with a broadly range-bound currency. We keep our long FX-hedged EGYTB trade idea active. In Ghana, USD/GHS has approached levels that previously triggered abrupt reversals, with the pair now near 11.80/USD. Market forces may again act to prevent sustained depreciation beyond this level. In Kazakhstan, USD/KZT volatility has increased, but current account dynamics continue to support medium-term tenge appreciation, underpinning our active short USD/KZT trade idea. In Kenya, we expect both…