More trouble in the offing for EMs? Emerging market currencies are nearing their “all-time low,” which suggests that these economies are in for more turbulence as rising US interest rates and trade tensions with China continue to add strain to the global economy, according to the FT. Pressured by a strong USD, liquidity shortages, and large current account deficits, “emerging currencies in the benchmark JPMorgan index have fallen almost 10% this year from their January peak, and would need to fall only another 2.5% to match their all-time low during the China growth scare of January 2016.” Even Asian EMs, which are typically considered safer than their African or South American counterparts, are facing increasing risk, as “repeated rounds of US tariffs will not only damage growth in China but also affect the rest of Asia through the integration of global value chains,” Principal Global Investors’ Seema Shah says. Last week, investors pulled a record of USD 6 bn out of emerging market equity funds after the US and China threatened to slap the other with additional import tariffs.

Just a hiccup along the way? Trade tensions will have to cool in order for “EM to return to stability,” but investors should not be in a rush to exit, according to Oppenheimer’s Hemant Baijal. Others also seem convinced that the sell-off is a temporary correction amid a stronger USD, which will run its course before “the smart money…[starts] nibbling in the emerging world.”