Emerging-Market Currencies End October on the Back Foot as the Dollar Banks Another Monthly Gain

In Pakistan, the new month opened with the rupee still under pressure against the major currencies. In the open market on November 1, the US dollar was being bought at Rs 277.50 and sold at Rs 280, the UK pound traded at Rs 371.65 buying and Rs 375.50 selling, and the euro changed hands at Rs 308.75 buying and Rs 314.13 selling, according to the day's published exchange data. The Chinese yuan sat at Rs 38.55 buying and Rs 38.90 selling, while the Japanese yen traded at Rs 1.7372 buying and Rs 1.8368 selling. For importers, overseas Pakistanis sending money home and families planning travel, that buying-selling gap of Rs 2.50 on the dollar is itself a cost worth watching: it widens whenever demand for hard currency runs hot.

Pakistan is far from alone. South Africa's rand slipped below R16.60 to the dollar during the week, reversing recent gains, and was trading at R16.72 to the dollar, R22.36 to the pound and R18.64 to the euro on November 1, pressured by a robust dollar, high oil prices, weaker precious metals and broader strain across emerging-market currencies. Brazil's real fared worse, falling more than 7% across the week on fiscal concerns following President Lula da Silva's election victory, while the Mexican peso, the Korean won and the Indian rupee also softened. Brent crude held around $113.40 a barrel and gold futures traded near $3,876.60 an ounce, down 3.51%, a combination that squeezes oil-importing economies twice over: dearer energy and a weaker local currency to pay for it.

Step back to the full month and the pattern sharpens. The dollar index, which tracks the greenback against six major peers, was flat at 101.88 at the end of October but still set for a second straight monthly gain. The euro was down 0.12% at $1.1168 and headed for a second straight monthly loss, having fallen nearly 1.5% in October to take its year-to-date loss to almost 5.1%, after touching its lowest since May 2025. A broad gauge of world currencies edged lower in October for a second consecutive month, its first back-to-back monthly decline in a year. Not every currency lost, though: the Canadian dollar rose nearly 1.9% and the Australian dollar about 1.2% in October, while the Mexican peso was the worst-performing emerging-market currency of the month, down about 4.1% against the dollar.

Why this matters is that emerging-market currencies rarely fall one by one; they fall together when the same forces hit them all at once. This time the shared drivers are a US dollar kept firm by expectations of prolonged high interest rates and safe-haven demand, with markets pricing around an 80% chance of a December rate rise, energy prices near multi-month highs, and unresolved tensions in the Middle East. The split inside the month is just as instructive: commodity-linked currencies such as the Canadian and Australian dollars managed gains, while currencies carrying fiscal or political worries, like the real and the rand, took the heaviest hits. In other words, October rewarded strong balance sheets and punished doubt, a filter that tends to stay in place until the dollar itself turns.

What to watch next is a week that could reset the board. The Reserve Bank of Australia decides on November 3, with markets seeing a high chance of another hike after a hot inflation print and hawkish comments from Governor Michele Bullock, and the Bank of England is also in focus, with markets almost fully pricing its first rate rise of 2026 on hotter-than-expected September inflation and a pickup in wage growth. Beyond central banks, the US midterm elections on November 3 and the jobs report on November 6 can each shift risk appetite in either direction. For readers following how these forces move exchange rates, our forex section explains the link between interest rates and currency moves, and the forex tools page has calculators for planning around volatility. (Not financial advice.)