(Bloomberg) — Emerging-market assets added to their recent advances on Friday amid thin holiday trading, as investor sentiment remained bullish heading into the year-end.
MSCI Inc.’s gauge of developing equities rose 0.4% on the day, led by the technology sector. The index, which has rallied 30% so far in 2025, is on track for its best year since 2017.
A corresponding measure of developing-nation currencies also climbed, reaching the highest level since mid-September. The Colombian peso and Hungarian forint and were among the top performers Friday. A Bloomberg gauge of the dollar was little changed on the session, capping its worst week since late June.
“For this week, risk sentiment is well supported by decent US data amid low liquidity,” said Ning Sun, a senior emerging-markets strategist at State Street Global Markets in Boston. “For next year, I think EM can pull off another good one, but the performance will be more reliant on the continuation of the current weak dollar trend as the interest rate differential narrows.”
Meanwhile, the Brazilian real fell as much as 0.5% as political jitters continued to hit the currency in a session marked by low liquidity, before later recouping most of the losses. On Thursday, Brazil’s former President Jair Bolsonaro released a handwritten letter confirming that he was backing one of his sons for the 2026 presidential race.
Currencies in Latin America are holding up “pretty well” amid low volatility around the holidays and as investors look to pick up carry, according to Brendan McKenna, an emerging markets economist and FX strategist at Wells Fargo Securities.
–With assistance from Giovanna Bellotti Azevedo.
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