(Bloomberg) — A handful of emerging-market currencies have held onto gains versus the dollar this year. That list may shrink in the coming weeks as the highly contagious delta variant forms a new fault line for developing nations.
Countries that are lagging in vaccination rates — such as South Africa and Russia — may feel the pressure as they tighten restrictions that will hurt economic activity, according to Credit Agricole CIB. Once the best performers of 2021, the rand and ruble were among those that knocked an index of emerging-market currencies lower in June for the first time in three months.
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“Achievements in terms of vaccination will increasingly be a differentiation factor among emerging markets in the second half,” said Sebastien Barbe, head of emerging-market strategy at Credit Agricole. “The impact of the further spread of the virus variants will vary significantly depending on vaccination rates,” as well as economic and political factors, he added.
Both the South African rand and Colombian peso are feeling the pain from a spike in Covid-19 cases, which is…