## EM currencies surprisingly resilient since Fed meeting
## No significant impact on credit spreads
## One should expect downward pressure on EM
Besides the impact on EMD Hard Currency spreads, the latest developments in emerging market currencies are also striking. Since May last year, the two main worries for EM investors have been the prospect of less easy monetary policy by the Fed and the economic slowdown in China. The fears of Fed tapering were dominant in the May-September period last year. Early this year, worries about China took centre stage after the January HSBC flash PMI index came in weaker than expected at 49.5.
With this is mind, one should have expected that the pressure on EM currencies would increase again after the FOMC meeting. Next to that, Chinese data continued to disappoint, with the HSBC flash PMI again coming in weaker than expected, at 48.1 in March. Finally the ongoing uncertainty about the situation in Ukraine still plays a role. All in all, a depreciation of EM currencies seemed likely in this environment. The opposite happened.