AUD hammered but emerging currencies predicted to rebound

The paradoxical reaction to the latest wave of European convulsions and the US downgrade – a flood of investment funds into US Treasuries, with a consequent redoubling of the downward pressure on equities and non-core currencies – could be short lived. Some global strategists expect emerging and commodity market currencies to rebound in time as the realisation sets in that global markets no longer offer a single currency, risk free return.