China's data of FX reserves might lay down a negative tone for emerging markets in the coming week, particularly if the likelihood of a sharp decline in reserves proves correct. Moreover, the overall activity might be weakened due to the Chinese New Year holidays. Much focus will also be given to the oil price developments and Fed's statements.

Oil prices have continued to be unstable; however, it has moved away from January lows, while concerns regarding growth and increasing risk aversion have resulted in cutting down the expectations of Fed rate rise. US Fed Chair Yellen's semiannual Monetary Policy Report in the coming week will be crucial to determine if dovish market expectation is validated. The unexpected negative interest rates move by the BoJ has raised the spectre of additional easing by central banks across the world.

Disturbingly, these measures are giving slight relief for emerging markets, although additional benign projections of Fed rate rise might at least weaken some of the USD momentum against the emerging market currencies in the short term.