The recent sharp falls in emerging market (EM) currencies against the US dollar do not reflect fundamental shifts in exchange rate policy in these countries. Instead the main driver is renewed demand for the dollar as a safe haven from a slowdown in the advanced economies and the reduction in risk appetite caused by the crisis in the euro-zone. Downward pressure on EM currencies is likely to continue for the rest of this year, but those of Emerging Asia should lead a recovery in 2012.