Decisions like this will benefit all categories of emerging bonds, but particularly local currency bonds which are positioned to gain value on the back of currencyappreciationover the long run.
Japan and Switzerland have both gotten involved in currency markets over the past two days, stepping in to prevent outsized appreciation in the yen and the Swiss franc.
Analysts said SAFE's move likely reflected the Chinese government's concerns over the yuan's rapid appreciation in recent weeks, but noted that the currency remains one of the bright spots among emerging markets.
The one country that most economists agree should let its currency rise is China (in theory, faster-growing countries should enjoy real appreciationover the long term).
Barclays recommended in a note to clients late Wednesday that they should anticipate further appreciation in the Brazilian currency, the real, with a target of BRL1.50 over the next three months.