Pacific Investment Management Co. says nobody should be fooled by the best start to any month since April for emerging-market currencies.

The bond behemoth says China’s Aug. 11 yuan devaluation and the strength of the dollar will weigh on the exchange rates, according to its Cyclical Outlook report.

“We expect Asian currencies to remain under pressure as they lose relative competitiveness with China due to the devaluation of the yuan,” Lupin Rahman, a London-based money manager at Pimco, which oversees $1.52 trillion of assets, wrote in the note released late on Thursday in Asia. “The risk-off sentiment due to China developments and the continued strength in the U.S. dollar are likely to keep the pressure on most emerging-market currencies, which are acting as a release valve for their economies."

A Bloomberg index tracking 20 developing-nation currencies has rallied 2.4 percent in October, while Colombia’s peso, Indonesia’s rupiah and Russia’s ruble have all gained more than 5 percent as the chances of a Federal Reserve rate increase this year receded. That came after the gauge plummeted 8.3 percent in the third quarter, the most in four years, as China weakened its exchange rate and commodity prices fell the most since 2008.

The headwinds are translating into slowing economic growth in developing nations, Michael Gomez, Newport, California-based head of emerging-markets portfolio management at Pimco, wrote in the same note. The asset manager said it’s still “cyclically cautious” on these countries, although it has reserved “dry powder” so it can add exposure when it sees opportunities.

“The recent bout of shocks highlights the cyclical risks that many EM countries are still vulnerable to,” said Gomez. These include “commodity cycles, political turmoil and periods of market volatility and risk aversion,” he said.

Downside Risks

The economies of Brazil, Russia, India and Mexico will expand around 2-3 percent on average over the next 12 months, Pimco forecast. There are “important downside risks” as China decelerates and emerging markets struggle to come up with growth models outside of exports and commodities. Although a Bloomberg index of raw material prices has rallied 2.2 percent in October, it is down 14 percent for 2015.

China’s surprise devaluation sent the yuan into its biggest decline in two decades and prompted a reassessment of the extent to which Asia’s largest economy is slowing. China plays an increasingly important role in the macro outlook for most developing nations, not just in Asia, said Rahman.

A gauge of dollar strength has risen 5.9 percent this year on bets the Federal Reserve will increase borrowing costs before the end of 2015. The currencies of Brazil, Turkey and Colombia have been the hardest hit in 2015, falling 32 percent, 21 percent and 18 percent, respectively.