High-yielding currencies back in form

HIGH-YIELDING emerging market currencies enjoyed a startling return to form in September and analysts say the outlook for the final quarter also looks positive, though not without risk.

June to August proved a difficult period for most of these currencies as a vicious sell-off in global fixed income markets triggered a bout of risk aversion. Emerging markets are generally seen as higher-risk destinations. However, with bond markets calmer, risk appetite has gradually returned and, with US interest rates low, investors are looking again at high-return emerging market currencies.

The South African rand , Turkish lira, Brazilian real and Hungarian forint have led the way up over the past month.