From Yahoo Finance: 2025-04-27 08:30:00

Emerging-market traders are closely watching the global economy and the US dollar after assets from developing countries saw unexpected gains under Trump. The dollar hit a three-year low, but emerging markets flourished. Now, with fears of a US slowdown, the outlook for developing-world assets hinges on Trump’s trade policies.

At the IMF and World Bank meetings, the IMF cut its global growth forecast due to potential fallout from Trump’s tariffs. A strategist at RBC Capital Markets in Toronto stated that a US slowdown could benefit foreign markets, but a recession would harm them. Emerging markets have proved resilient, with stocks outperforming the S&P 500 Index and most currencies gaining against the dollar.

Investors are optimistic that developing nations can recover the $211 billion pulled from the asset class since 2022, including $30 billion this year. JPMorgan Chase & Co. survey results suggest investors believe the dollar will weaken further by the end of 2025. Money managers are seeking assets sensitive to dollar weakness or countries that may strike trade deals with Trump.

With a weaker greenback persisting, emerging-market central banks may cut interest rates to spur growth. Lower borrowing costs could boost appetite for domestic bonds and stocks, particularly in Asia, Chile, and the Czech Republic. Countries like India, Argentina, and Vietnam could benefit from trade deals with the US, making emerging markets the largest beneficiary of a weaker dollar.

In Asia, all eyes are on the Bank of Japan meeting, where policymakers are expected to hold interest rates. Colombian policymakers are likely to maintain interest rates at 9.5%, while Chilean counterparts are expected to keep borrowing costs at 5%. Mexico’s preliminary GDP numbers may indicate weakening domestic demand, according to Bloomberg Economics.

Read more: Investors Turn Focus to Global Growth After EM’s Roaring Start