According to the Wise News app, as the rise of extreme right-wing forces in European elections, political risk has become a global focus. On Monday, most emerging market currencies showed a depreciation trend against the US dollar, with the market volatility indicator rising accordingly. The Hungarian forint became one of the biggest losers of the day against the US dollar and the euro, especially after Emmanuel Macron, President of France, declared parliamentary elections ahead of Hungary's disastrous defeat in the European Parliament elections, further exacerbating market anxiety. Due to the depreciation of the euro, the Czech koruna, Romanian lei and Polish zloty also performed poorly.

This year, 40 countries worldwide will hold national elections, and political factors pose an increasing threat to emerging market assets. Recently, unexpected results in elections in Mexico, South Africa and India caused a dramatic drop in the value of assets in these countries.

It is understood that after a day of volatility, the Mexican peso closed near the day's high, which is related to the constitutional reform timetable announced by Ricardo Monreya, the majority leader of the Senate, who will coordinate the process with President-elect Claudia Sheinbaum. In addition, the market is also waiting for news of the meeting between Mexican President Andres Manuel Lopez Obrador and his successor, followed by a press conference.

The South African rand rebounded against the trend as traders expected political parties to hold talks to form a coalition government. The May 29 election failed to produce an absolute winner, causing the rand to suffer a heavy blow this month. Razia Khan, chief economist at Standard Chartered Bank, commented, "The market does not like uncertainty, and any solution that can reduce uncertainty and the risk of extreme results will be welcomed by the market."

Among emerging market bonds, Argentine dollar-denominated bonds performed the strongest, thanks to legislators' opposition to President Javier Milei's market-oriented reform plan, which caused bond prices to rebound. This comprehensive bill is expected to be voted on June 12th.

Mark McCormick and Jayati Bharadwaj, strategists at Dowse Securities, pointed out: "The uncertainty of election results has caused panic in the market, and this is just the beginning of a more turbulent second half of the year. The market has largely ignored the political dynamics of the United States so far, but the situation may change." They also mentioned that the debates between US presidential candidates later this month may be of great interest to investors.

Frantisek Taborsky, a strategist at ING Bank NV, said that the strong performance of France's extreme-right party in the general election and the potential impact of its support for Ukraine may require the market to re-evaluate the risk premiums for Central and Eastern European currencies.

Bertrand Delgado, research and strategy director at French Industrial Bank, wrote in a report: "We expect emerging market currencies to reflect higher risk premiums than before the election, and to remain volatile in the short term." This reflects the market's sensitivity to political uncertainty and its far-reaching impact on currency values and global financial market stability.