By  Jon Vollemaere CEO R5FX
By Jon Vollemaere CEO R5FX

Emerging Market FX in 2020: What's in store?

For more than a decade, GDP growth rates in Asia and other EMs have outstripped developed markets. With the trend expected to continue to grow, institutional investors’ appetite for EM will also continue to take a leaps forward, and as with most markets its an electronic story.

As more and more of the EM world adopts electronic methods the wider and the faster that access becomes. So a very large part of that is the slow but incremental march of electronic trading tools. If you go back a short 3 years ago there was virtually no electronic NDF and the likes of RMB and MXN to pick just two - were nowhere near what they are today. Trump wasn’t tweeting about the Wall and there were only two Chinese Bank branches in London (one of which celebrates its 90th year in London in 2019)  Now there are eight. It’s fair to say that many Banks in particular are paying a lot more attention to EM pairs these days and I suspect that’s a combination of customer demand, low yield elsewhere and liquidity attracting liquidity. The combination of macro-economic trends and surge of passive flows will not only attract further interest from institutional investors seeking alpha in emerging markets, but will also result in a change in EM liquidity levels. The changes in the...continued

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