Emerging-market currencies posted modest gains on Monday as investors recalibrated expectations for U.S. interest rates. Traders stayed focused on the Federal Reserve’s next moves, with the dollar’s direction continuing to drive short-term pressure across developing-market assets.

The gains were restrained, however, as market sentiment remained uneven. A mixed picture in BRICS economies highlighted how capital flows are still shifting in response to risk appetite, local policy decisions and global borrowing costs.

Analysts say the broader backdrop remains fragile for many emerging markets. Higher-for-longer U.S. rates can tighten financial conditions abroad, making it harder for governments and companies to refinance debt and attract stable investment.

Even so, currency moves on Monday suggested investors are still willing to take selective positions in higher-yielding markets when the outlook for the U.S. economy appears less aggressive. For now, traders are watching inflation data and Fed commentary for clearer signals on the path ahead.