Emerging market currencies will stay weaker in the first quarter at least on more volatility in Chinese markets. Weakness in China's economy is nothing new, but this combined with the proposed end to the equity selling ban, have prompted pronounced CNY weakness and a renewed equity market slump. 

Uncertainties over Beijing's exchange rate policy on a slowing economy and growing cracks in the USD bloc are creating ruptures across the rest of the EM asset class. After consecutive low fixings, the Chinese authorities showed stabilization efforts for a few days. But that won't last long and the Yuan may see sharp falls again. 

The offshore-onshore Yuan differentials have reached an all time high earlier in the week. The RMB NEER has been trading closer to the bottom end of the sideways band since mid-August. The pressure on the currency will likely remain in the absence of a pick-up in growth and continue to dent the EM Fx space.