LONDON (Reuters) – Morgan Stanley’s analysts returned to a ‘bearish’ stance on emerging market FX on Tuesday, predicting China’s economic strains would continue to push down its currency and flagged the growing set of developing countries also now cutting interest rates.
“We expect more CNH (yuan) weakness, and China macro risks add to existing pressure from weak global growth and EM central bank easing cycles,” a new report from the U.S. investment bank, which moved its stance on EM FX to bearish from neutral, said.
“We maintain a neutral stance on EM rates and credit,” it added.
(Reporting by Marc Jones, editin by Karin Strohecker)