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Emerging market currencies suffer worst start to the year since 2020

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Emerging market currencies suffer worst start to the year since 2020

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Emerging market currencies are on track for their worst first half of the year since 2020, pushed lower by an unexpectedly strong dollar and an unwind in a popular trading strategy across Latin American markets.

JPMorgan’s emerging markets foreign exchange index has fallen 4.4 per cent so far this year, a drop more than twice as large as the same period in the three previous years. The move has come as investors have torn up hopes of rapid US interest rate cuts in 2024 and nerves around weakening economies and expansive fiscal policies have pushed currencies in some major emerging markets lower.

“It’s the combination of a more resilient economy in the US and, on the emerging markets side, emerging markets like Chile, Hungary and Brazil have kept cutting rates,” said Luis Costa, global head of emerging markets strategy at Citigroup. 

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“And let’s be honest the prospects for growth in EM are not amazing for this year and the next — there’s a continued contraction in global trade and it’s a very complicated year for elections,” he added.

Much of the recent weakness has come from the unwinding of so-called carry trades, where investors profit from differences in yields between currencies. The trade had been popular with emerging market investors earlier this year.

But in larger emerging markets in particular, these trades have run into trouble as elections made assets more volatile and the future path of local interest rates also became less clear.

Recent weakness in the Mexican peso has been “an example of the unwinding of a sizeable foreign exchange carry trade that was previously building up for two years, from mid 2022 to end-May 2024”, JPMorgan analysts said this week.

The Mexican peso has fallen by almost ten per cent since the country’s ruling Morena party won a landslide victory that stoked concerns about fiscal policy in Mexico and increased interference in the economy. Investors say the effects rippled across other Latin American currencies such as the Colombian peso and Brazilian real. 

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“LatAm foreign exchange has been the one mostly responsible for the recent weakness — it was kicked off by some of the political changes but there was very heavy positioning in some of the higher carry currencies and it caused the whole trade to unwind,” said Grant Webster, a portfolio manager at fund firm Ninety One. 

Some investors have been switching carry trades from larger markets such as Brazil towards smaller, poorer economies that are exiting periods of turmoil and where they believe policies including high interest rates still make bets on local currency bonds attractive, for instance Nigeria and Egypt.

Asian currencies, among the most impacted by a weak Chinese economy, have also struggled this year. The South Korean won has fallen 7 per cent against the dollar, while the Thai baht and the Indonesian rupiah have each fallen around 6.5 per cent.

Currencies around the world have struggled this year to perform against the dollar, which is up 4.5 per cent against a basket of six major currencies, after strong US economic data and sticky inflation forced a big rethink on the outlook for interest rates.

Investors are now betting on two rate cuts by the Federal Reserve this year, down from six or seven at the start of the year. 

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“A bit more than half of EM weakness has been about dollar strength,” said Kieran Curtis, emerging market portfolio manager at Abrdn. “At the start of the year investors thought there could be six or seven [US] rate cuts this year — and now there could be none.”

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Video: Minnesota Governor Condemns ICE Shooting

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Video: Minnesota Governor Condemns ICE Shooting

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Minnesota Governor Condemns ICE Shooting

Governor Tim Walz of Minnesota slammed the fatal shooting of a woman by an immigration agent. President Trump said that the agents had acted in self-defense.

This morning, we learned that an ICE officer shot and killed someone in Minneapolis. We have been warning for weeks that the Trump administration’s dangerous, sensationalized operations are a threat to our public safety, that someone was going to get hurt. Just yesterday, I said exactly that. What we’re seeing is the consequences of governance designed to generate fear, headlines and conflict. It’s governing by reality TV. And today, that recklessness cost someone their life.

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Governor Tim Walz of Minnesota slammed the fatal shooting of a woman by an immigration agent. President Trump said that the agents had acted in self-defense.

By Jiawei Wang

January 8, 2026

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U.S. to exit 66 international organizations in further retreat from global cooperation

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U.S. to exit 66 international organizations in further retreat from global cooperation

The symbol of the United Nations is displayed outside the Secretariat Building on Feb. 28, 2022, at United Nations Headquarters.

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WASHINGTON — The Trump administration will withdraw from dozens of international organizations, including the U.N.’s population agency and the U.N. treaty that establishes international climate negotiations, as the U.S. further retreats from global cooperation.

President Trump on Wednesday signed an executive order suspending U.S. support for 66 organizations, agencies, and commissions, following his administration’s review of participation in and funding for all international organizations, including those affiliated with the United Nations, according to a White House release.

Most of the targets are U.N.-related agencies, commissions and advisory panels that focus on climate, labor, migration and other issues the Trump administration has categorized as catering to diversity and “woke” initiatives. Other non-U.N. organizations on the list include the Partnership for Atlantic Cooperation, the International Institute for Democracy and Electoral Assistance and Global Counterterrorism Forum.

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“The Trump Administration has found these institutions to be redundant in their scope, mismanaged, unnecessary, wasteful, poorly run, captured by the interests of actors advancing their own agendas contrary to our own, or a threat to our nation’s sovereignty, freedoms, and general prosperity,” Secretary of State Marco Rubio said in a statement.

Trump’s decision to withdraw from organizations that foster cooperation among nations to address global challenges comes as his administration has launched military efforts or issued threats that have rattled allies and adversaries alike, including capturing autocratic Venezuelan leader Nicolás Maduro and indicating an intention to take over Greenland.

U.S. builds on pattern of exiting global agencies

The administration previously suspended support from agencies like the World Health Organization, the U.N. agency for Palestinian refugees known as UNRWA, the U.N. Human Rights Council and the U.N. cultural agency UNESCO. It has taken a larger, a-la-carte approach to paying its dues to the world body, picking which operations and agencies it believes align with Trump’s agenda and those that no longer serve U.S. interests.

“I think what we’re seeing is the crystallization of the U.S. approach to multilateralism, which is ‘my way or the highway,’” said Daniel Forti, head of U.N. affairs at the International Crisis Group. “It’s a very clear vision of wanting international cooperation on Washington’s own terms.”

It has marked a major shift from how previous administrations — both Republican and Democratic — have dealt with the U.N., and it has forced the world body, already undergoing its own internal reckoning, to respond with a series of staffing and program cuts.

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Many independent nongovernmental agencies — some that work with the United Nations — have cited many project closures because of the U.S. administration’s decision last year to slash foreign assistance through the U.S. Agency for International Development, or USAID.

Despite the massive shift, the U.S. officials, including Trump himself, say they have seen the potential of the U.N. and want to instead focus taxpayer money on expanding American influence in many of the standard-setting U.N. initiatives where there is competition with China, like the International Telecommunications Union, the International Maritime Organization and the International Labor Organization.

The latest global organizations the U.S. is departing

The withdrawal from the U.N. Framework Convention on Climate Change, or UNFCCC, is the latest effort by Trump and his allies to distance the U.S. from international organizations focused on climate and addressing climate change.

UNFCC, the 1992 agreement between 198 countries to financially support climate change activities in developing countries, is the underlying treaty for the landmark Paris climate agreement. Trump — who calls climate change a hoax — withdrew from that agreement soon after reclaiming the White House.

Gina McCarthy, former White House National Climate Adviser, said being the only country in the world not part of the treaty is “shortsighted, embarrassing, and a foolish decision.”

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“This Administration is forfeiting our country’s ability to influence trillions of dollars in investments, policies, and decisions that would have advanced our economy and protected us from costly disasters wreaking havoc on our country,” McCarthy, who co-chairs America Is All In, a coalition of climate-concerned U.S. states and cities, said in a statement.

Mainstream scientists say climate change is behind increasing instances of deadly and costly extreme weather, including flooding, droughts, wildfires, intense rainfall events and dangerous heat.

The U.S. withdrawal could hinder global efforts to curb greenhouse gases because it “gives other nations the excuse to delay their own actions and commitments,” said Stanford University climate scientist Rob Jackson, who chairs the Global Carbon Project, a group of scientists that tracks countries’ carbon dioxide emissions.

It will also be difficult to achieve meaningful progress on climate change without cooperation from the U.S., one of the world’s largest emitters and economies, experts said.

The U.N. Population Fund, the agency providing sexual and reproductive health worldwide, has long been a lightning rod for Republican opposition, and Trump cut funding for it during his first term. He and other GOP officials have accused the agency of participating in “coercive abortion practices” in countries like China.

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When President Biden took office in January 2021, he restored funding for the agency. A State Department review conducted the following year found no evidence to support GOP claims.

Other organizations and agencies that the U.S. will quit include the Carbon Free Energy Compact, the United Nations University, the International Cotton Advisory Committee, the International Tropical Timber Organization, the Partnership for Atlantic Cooperation, the Pan-American Institute for Geography and History, the International Federation of Arts Councils and Culture Agencies and the International Lead and Zinc Study Group.

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GOP gearing up to face tough midterms. And, Pentagon reviews women in ground combat

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GOP gearing up to face tough midterms. And, Pentagon reviews women in ground combat

Good morning. You’re reading the Up First newsletter. Subscribe here to get it delivered to your inbox, and listen to the Up First podcast for all the news you need to start your day.

Today’s top stories

President Trump continues to suggest that the U.S. will have a lengthy and active role in Venezuela after capturing the ousted president Nicolás Maduro. Trump has proposed several plans for Venezuela’s future government and economy. In those proposals, U.S. companies are expected to play a key role.

President Trump dances as he departs after speaking during a House Republican retreat at The John F. Kennedy Center for the Performing Arts on Jan. 6, 2026, in Washington, DC. House Republicans will discuss their 2026 legislative agenda at the meeting.

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  • 🎧 Trump and his aides are unclear about the future of Venezuela, NPR’s Franco Ordoñez tells Up First. When the president says the U.S. will run the country, many eyes are on Stephen Miller, Trump’s deputy chief of staff for policy. Miller, known for his stringent immigration policies, is one of the U.S. officials overseeing Venezuela. Ordoñez also says Miller has more recently described ruling over the hemisphere by force.
  • ➡️ Last night, Trump posted on social media that Venezuela will turn over between 30 million and 50 million barrels of sanctioned oil to the U.S. While seizing current oil production is one thing, overhauling Venezuela’s oil industry requires a far greater effort. Here’s why.

While meeting with House Republicans yesterday, Trump attempted to offer his party a roadmap to victory in this year’s midterm elections. The president acknowledged the possibility of his party losing the majority in the House this year. Trump said in his speech that the president’s party often loses the midterms.

  • 🎧 NPR’s Domenico Montanaro says that while it’s true the midterms are hard on the president’s party, it is even worse when a president’s approval rating is below 50%. Trump is facing his lowest second-term approval ratings, largely due to the rising cost of living. During yesterday’s speech, the president didn’t offer much on the topic. When he did discuss the economy, it was about how the stock market is at historic highs. He also touted his tariffs, which have actively raised prices on many things. People have informed pollsters for months that they believe the president’s policies have harmed the economy. Montanaro says one area where Trump and Republicans could take action is legislation on health care.

The Pentagon is preparing a six-month review to evaluate what it calls the military “effectiveness” of women serving in ground combat roles. Undersecretary Anthony Tata requested that the Army and Marine Corps submit data on the readiness, training, performance, casualties and command climate of ground combat units and personnel by Jan. 15. The effort aims to determine how gender integration has influenced operational success over the last decade.

Special series

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Trump has tried to bury the truth of what happened on Jan. 6, 2021. NPR built a visual archive of the attack on the Capitol, showing exactly what happened through the lenses of the people who were there. “Chapter 3: Assault on the Capitol,” lays out the timeline of key moments throughout the day as the riot unfolded.

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On the morning of Jan. 6, 2021, Trump held a “Save America” rally at the Ellipse, a site near the White House and U.S. Capitol. Multiple speakers promoted voter fraud myths and urged Vice President Mike Pence to overturn the election. Meanwhile, a group of 200 Proud Boys marched toward the Capitol. Before Trump’s speech ended, violence erupted on Capitol grounds. The Jan. 6 attack on the Capitol “was the most videotaped crime in American history, if not world history,” according to Greg Rosen, a former federal prosecutor who led the Justice Department unit that investigated the riot. But conspiracy theories still falsely label the assault a “normal tourist visit.” NPR’s review of thousands of court videos shows rioters assaulting officers with weapons, calling for executions and looting the building. These videos show the exact timing of events as they occurred. Corresponding maps show the locations where the conflict took place.

To learn more, explore NPR’s database of federal criminal cases from Jan. 6. You can also see more of NPR’s reporting on the topic.

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The tin soldier, a marionette puppet made by Nicolas Coppola and the main character in "The Steadfast Tin Soldier" show at Puppetworks.

The tin soldier, a marionette puppet made by Nicolas Coppola and the main character in “The Steadfast Tin Soldier” show at Puppetworks.

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Anh Nguyen for NPR

For more than 30 years, Puppetworks has staged classics like The Tortoise and the Hare, Pinocchio, Aladdin and more in Brooklyn’s Park Slope neighborhood. Every weekend, children gather on foam mats and colored blocks to watch wooden renditions of the shows. The company’s founder and artistic director, 90-year-old Nicolas Coppola, has been a professional puppeteer since 1954. The theater has puppets of all types, including marionettes, swing, hand, and rod. They transport attendees back to the 1980s, when most of these puppets were made. Over the years, Coppola has updated the show’s repertoire to better meet the cultural moment. Step inside his world with these images.

3 things to know before you go

An overhead view of Ascot Hills Park in Los Angeles, CA. A 10,000 square foot patch of green stands out against a dirt path and brown weeds.

This tiny forest in Los Angeles, CA is one of many micro-forests around the world offering green space and contributing to local biodiversity.

Demian Willette/Loyola Marymount University

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  1. Scientists are establishing micro-forests in big cities to boost biodiversity and rejuvenate compromised land. Short Wave producer Rachel Carlson visited California’s largest micro-forest. Tune in to hear her account of the experience.
  2. The Hungarian arthouse director Béla Tarr has died at 70. He’s best known for his bleak, existential, and challenging films, including Sátántangó.
  3. While we often associate serendipity with luck or happy accidents, its origin suggests it’s more than just happenstance. This week, NPR’s Word of the Week explores the historical impact of serendipity and offers tips on how to cultivate it.

This newsletter was edited by Suzanne Nuyen.

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