EM Reserves Don’t Boost Sentiment Anymore

By: Macro Strategy Team

January 24, 2025

By: Macro Strategy Team

Macro Strategy Team

When it comes to investors’ confidence towards EM, it’s all about the ability to prevent capital flight. We often see a close relationship between EM reserves vs. FX performance over time. There were moments in which EM was depleting their reserves to defend its currencies during 2023, but this completely reversed in the past 12 months. The issue is although EM is far more resilient, local currencies continue to depreciate against the dollar as investors position for a new world under President Trump.

Author Bios

Macro Strategy Team

The Macro Strategy team provides cross-asset research and market intelligence across developed and emerging economies. Their expertise in FX, equities, and fixed income is complemented by proprietary indicators on investor behavior, inflation, and sentiment—turning complex data into actionable insights that help clients anticipate risks and capture opportunities.

1. Peter L. Bernstein Award for Best Article in an Institutional Investor Journal in 2013; Bernstein-Fabozzi/Jacobs-Levy Award for Outstanding Article in the Journal of Portfolio Management in 2006, 2009, 2011, 2013 (2), 2014, 2015, 2016, 2021; Graham & Dodd Scroll Award for article in the Financial Analysts Journal in 2002 and 2010. Roger F. Murray First Prize for Research Presented at the Q Group Conference in 2012, 2021, 2023. Harry M. Markowitz Award for Best Paper in the Journal of Investment Management in 2022, 2023. Doriot Award for Best Private Equity Research Paper in 2022.