The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookiesbefore using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

FX: Impact of Fed hikes not limited to EM currencies

With the US Federal Reserve apparently keen to step up the pace of interest-rate rises over the coming months, it is not just emerging market currencies that are expected to suffer.


High inflation has finally increased the pressure on US policymakers to raise interest rates more aggressively than the usual quarter-point hike – on May 5, it unveiled a 50 basis-point rise, after the annual increase in consumer prices hit 8.5% in March, the highest level since the 1980s.

As for the impact on the foreign exchange market, JPMorgan analysts note that commodity currencies have historically been more insulated from higher US yields, but suggest that lower-yielding currencies that are commodity importers and where the central bank is expected to be less hawkish than the US Federal Reserve are vulnerable.

John Velis, BNY Mellon

John Velis, FX and macro strategist Americas at BNY Mellon, says a number of Asia-Pacific currencies fall into this category, where central banks are behind the curve and could falter as the USD strengthens further.

“In contrast, we think LatAm currencies are in a good place, considering how soon and how much central banks in the region have turned hawkish and how much they have lifted rates,” he adds.

Steve Sosnick, chief strategist at Interactive Brokers, has a different perspective.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree