Emerging Markets Will Have to Weather Another Dollar Hurrah

(Bloomberg) — A cohort of Wall Street’s emerging-market bulls is growing wary of calling a new dawn for riskier assets, opting for a more cautious approach to developing-nation currencies.

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With the bulk of Federal Reserve aggressive rate increases already over, some of the world’s top investors predict the dollar will soon fall into a multi-year weakening trend. Such a shift stands to support emerging markets — and indeed propelled gains of nearly 9% in developing currencies from late October to early February.

But this month’s market turmoil amid a greenback bounce has given pause to some would-be buyers.

Money managers from abrdn Plc to Fidelity Investment are wary of being caught on the wrong side of the latest dollar rally, especially after the MSCI Inc. gauge of developing currencies wiped out almost all of its year-to-date gains.

“We are concerned…