NEW YORK (Reuters] – The slowing economic growth of emerging markets in the fourth quarter is due to China, Russia and tighter monetary policies, JPMorgan analysts (NYSE:) said Monday.

“China’s adherence to its zero-COVID policy, Russia’s recession and tightening global financial conditions are set to pull EM growth sharply lower this quarter,” wrote Luis Oganes, head of currencies, commodities and EM research, and Jonny Goulden, head of EM local markets and sovereign debt strategy at JPMorgan.

They said that emerging market currencies will likely underperform as the U.S. dollar strengthens and there are risks to EM economic growth.

On Monday, the dollar was at its highest level in 20 years against a basket developed-market currencies. An index of EM currencies reached its lowest point since November 2020.

The U.S. Bank maintains an underweight on local market debt as the inflation rate in the region has been revised higher. Expectations for higher rates are also higher as central bank attention continues to be focused on inflation.

They are neutral regarding foreign debt, with a market-weight on the EMBI Global diversified Index. “EM sovereigns continue to be at the mercy rate but cushioned through a combination front-loaded pain und cleaner technicals.”

They maintain a market-weight on CEMBI for EM corporate credits because the “uncertain market environment and macro risk are mitigated through strong standalone fundamentals as well as supportive technicals.”