In a fresh wave of market volatility, the USD/CNH has surged by around 1%, signaling growing concerns over a potential resurgence in trade wars. As the global financial landscape braces for impact, emerging markets (EMs) are seeing significant pressure, with analysts at ING highlighting key battlegrounds that could shape the future of EM currencies.
US-China Tensions and the Yuan’s Resilience
One of the focal points is the Chinese yuan (CNY), which is expected to face sustained pressure under a scenario where Donald Trump secures a second term. ING’s FX analyst Chris Turner notes that the best-case scenario for the onshore USD/CNY rate would hover around 7.30, assuming local authorities avoid another round of renminbi devaluation akin to the one seen in the summer of 2019. However, despite Chinese efforts to maintain the yuan as a store of value on the global stage, the currency is still vulnerable in the face of rising trade tensions and broader market uncertainties.
Hungarian Forint in Focus Amid Tightening Liquidity
In Europe, the Hungarian forint (HUF) is under particular scrutiny. EUR/HUF has broken the 410 level, and market observers are closely watching the National Bank of Hungary’s response. The central bank is expected to abandon its easing cycle, focusing instead on supporting the forint. This may include taking measures such as reducing market liquidity to tighten overnight rates, which could help stabilize the forint in the short term. Forward points for the Hungarian currency are likely to remain under widening pressure as the economy adjusts to external shocks.
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Mexican Peso Faces Volatility, Peso Outlook Dims
In Latin America, the Mexican peso (MXN) is also feeling the heat, having fallen by 3% in recent days. ING’s analysts predict that 2025 could be a particularly turbulent year for the peso, especially if President Trump revisits the U.S.-Mexico-Canada Agreement (USMCA) review in 2026. With high volatility surrounding the peso, there is increasing speculation about the possibility of the USD/MXN pair pushing towards the 22.00 mark in the coming weeks. The peso’s vulnerability has been further compounded by weak sentiment in the broader Latin American region, with the Brazilian real (BRL) and Chilean peso (CLP) both facing significant headwinds.