Due to the impact of the Middle East situation, emerging market currency volatility surpassed that of developed markets this week.

Golden Ten Data reported on March 5 that this week, the volatility of emerging market currencies surpassed that of developed market counterparts for the first time since last May. The JPMorgan Emerging Market Volatility Index rose above the G7 currency volatility indicator on Tuesday, after the former had stayed below the latter for 209 consecutive days—the longest streak since records began in 2000. Mingze Wu, a forex trader at Singapore's StoneX Financial Pte, said: "Emerging market FX volatility has been affected by the escalation in the Middle East and sharp fluctuations in Asian stock markets. Once the situation in the Middle East cools down, volatility should subside." Almost all emerging market currencies fell against the US dollar this week, though this may not change the broader backdrop: strong commodity prices and robust capital inflows continue to support demand for emerging market assets and make carry trades attractive, while the US dollar overall is in a weakening trend. Wee Khoon Chong, a strategist at BNY Mellon, said: "Oil prices are a key driver behind the weakness in emerging market currencies and the recent rise in volatility. If the Middle East situation eases, demand for carry trades in high-yielding emerging market currencies may rebound, thereby driving FX volatility lower."