Bullish Dollar (USD) Bets Against EM Currencies Drop to 16-Year Low

Options traders are the least bullish on the dollar against emerging-market currencies since 2007 as impending US interest-rate cuts boost the appeal of higher-yielding assets.

The greenback’s three-month 25-delta risk-reversal rate against EM currencies fell to 0.90% points this week from a year-to-date high of 1.19% points in mid-January, according to an index compiled by JPMorgan Chase & Co. Risk reversals are a hedging strategy that protects a long or short position by using put and call options.