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Foreign Exchange

EM currency returns recover in June; CEEME shines after last gasp rally

Emerging market (EM) currency index returns bounced back in June as fears over the turmoil wrought by a break-up of the euro receded, according to data from an independent index provider.

The passive, fully funded currency indexes provided to EuromoneyFXNews show EM currencies all recovered from sharp losses in May, which were triggered by an inconclusive first general election in Greece that ignited fresh fears over eurozone sovereign debt and its potential to wreak havoc across financial markets. A turbulent June saw EM currency returns start the month on the back foot, with a victory for the pro-bailout faction in Greece’s second round of elections only briefly helping to ease investor fears over a eurozone meltdown.

A painful and potentially costly month for currency index investors was saved right at the death, however, as concerted action to address the eurozone debt crisis by EU leaders at a summit in Brussels last week delivered a huge risk rally. That saw EM currency index returns turn positive over the month, helping to recover some of May’s sharp losses.

The top performer was the Central and Eastern European and Middle East (CEEME) currency index, which, given its geographical proximity, is the most sensitive to fears over eurozone debt. It climbed 4.01% in June, following a drop of 7.99% in May.

Meanwhile, the EM Top 10 index recovered to stand up 3.48% in June after falling 6.22% in May. The African currency index rose 2.09% in June, the Asia currency index was up 1.86% and the Latam currency index climbed 2.9%.

The Commodity Currencies index, which was down 7.26% in May, rose 3.72% in June.

Index                   June return

Africa                   2.09%

Asia                     1.86%

EM top 10           3.48%

Latam                 2.90%

CEEME               4.01%

Commods         3.72%

Source: Independent index provider

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