By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – Investors are grappling with conflicting signals on emerging market currencies as they weigh easing by the Federal Reserve and other major central banks against the economic damage already wrought by the coronavirus outbreak.
The MSCI International Emerging Market Currency Index pared a portion of its 2020 losses in recent days as the Fed, Bank of Australia and other developed-country central banks unleashed rate cuts aimed at cushioning their economies from coronavirus-fueled slowdowns. The measure is still down more than 2% on the year.
(GRAPHIC: MSCI International EM Currency Index – https://fingfx.thomsonreuters.com/gfx/mkt/13/2903/2868/MSC1%20EM%20%20Index.png)
Emerging market bulls typically welcome lower rates in the developed world as they boost the attractiveness of developing countries’ assets and help fuel the carry trade, a strategy in which investors borrow in…