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Foreign Exchange

Brics star among rising currency indexes

Emerging market currency index returns got off to a storming start in 2012, as investors entered the New Year in buoyant mood, according to data provided by an independent index provider.

The passive, fully funded currency indexes provided to EuromoneyFXNews show that the Bric index was the star performer in January, rising 5.7% during the month, comfortably wiping out the loss of 1.1% registered in 2011. As a liquidity injection from the ECB, some encouraging US economic data and receding fears of a hard landing in China combined to lift risk appetite, other emerging market currency indexes also posted sharp gains as investors saw buying opportunities after last year’s declines.

The Bric index, which includes the South African rand, rose 5.3%, while the Latin American index – the only emerging market index to post positive returns in 2011 – rose by a further 4.8%.

The Central Eastern European and Middle Eastern currency index also gained 3.6% last month, while the Asian currency index rose 3.2% and the African currency index was up 2.7%.

Also reflecting increased investor confidence in the global economy, the Commodity Currencies index, which dropped by 1.5% in 2011, rose 3.4% in January.

 EM currency indexes off to flying start in 2012

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