Emerging market currencies advanced to fresh multi-month peaks on Friday, extending an eight-week winning streak as the U.S. dollar remained near multi-month lows.
The MSCI Emerging Market Currency Index rose 0.3%, continuing a run of historic highs for the month. The MSCI Emerging Market Equity Index climbed 1.3%, tracking toward a second consecutive weekly gain. U.S. Treasury yields rebounded after a midweek intervention by the Treasury provided only brief respite from selling pressure.
U.S. Treasury Secretary Scott Bessent indicated the government could expand bond buybacks and raised the prospect of fiscal consolidation. China’s Vice-Finance Minister Liao Min said Beijing would introduce additional fiscal measures in response to shifting economic conditions amid slowing growth.
Geopolitical tensions in the Gulf, where the U.S. threatened to impose sweeping sanctions on Iran, kept inflation risks in focus. Rising U.S. debt levels and political uncertainty were cited as factors weighing on the dollar’s purchasing power.
In Asia, the South Korean won strengthened 0.9% to an 11-month high, heading for a weekly gain of more than 2%. The Taiwan dollar advanced 0.7%. South Korea’s KOSPI and Taiwan’s stocks posted modest gains but still recorded weekly losses of nearly 1%.
The Chinese yuan hovered near a 3.5-year high, while the Shanghai Composite held steady and the CSI 300 blue-chip index rose 0.6%. In Central Europe, the Czech koruna gained 0.4% against the euro, and Czech stocks climbed 0.5%. The Ministry of Finance trimmed its growth outlook on Thursday.
The Polish zloty added 0.2%, and Polish stocks rose 0.8%. The government proposed lifting the corporate tax rate for major utilities and fuel companies to 30% by 2027, according to state news agency PAP. Hungarian markets remained closed for a national holiday.
In Turkey, the lira strengthened 2.1% and equities rose 0.8%. Business confidence among manufacturers climbed to 102.8 points in August, signaling optimism as readings above 100 indicate expansion.
