The case for dollar-denominated EMD over local currency

The US Presidential Election has thrown up both challenges and opportunities for emerging market debt investors. Dollar strength and rising US interest rates are likely to put pressure on parts of the market.

But there are also EM bonds that will continue to benefit from more positive factors like relatively healthy national balance sheets and still-substantial spreads. Without doubt, US President Donald Trump's victory has complicated EM investing. For much of last year, investors were largely focused on the premium yield offered by both EM local and hard-currency bonds, particularly as yields on more developed market bonds turned negative.  But following Trump's victory the markets became unsettled as the dollar rallied sharply.  In part, dollar strength was down to expectations Trump...