The latest rise in the price of oil – and our view that it will increase further this year – could push current account and budget balances into surplus in many of the EM producers. It should ease any concerns about dollar pegs in the Gulf, although we think the currencies of Angola and Nigeria will still need to weaken further. Meanwhile, higher oil prices will push up headline inflation across EMs, with the spike in Q2 set to be even larger than we’d previously thought. But central banks are likely to look through this.
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