Emerging-market assets extended their rally ahead of what’s expected to be the first rate cut from the Federal Reserve in more than four years, with a weaker dollar and lower Treasury yields supporting risk appetite.

The benchmark MSCI equity index advanced for the fourth day in the longest streak of gains in more than a month, adding $321 billion to the market cap. The MSCI index tracking developing-nation currencies rose for the fifth day, with the Malaysian ringgit, Indonesian rupiah and the Philippine peso leading Tuesday’s gains.

The US dollar has been weakening further as traders are divided whether the Fed will cut 25 basis points or 50 basis points on Wednesday. When the Fed last reduced interest rates in 2020, the EM stock index closed the year with a 16% gain. This time, Pacific Investment Management Co. expects the Fed to cut three times this year by a total of 75 basis points, though some analysts reckon the rally in emerging-market assets may be overdone.

“The acceleration in Fed easing bets over recent days has been supportive of risk conditions, helping to keep EM currencies on the front foot, epically low-yielding Asian FX,” said Nick Rees, FX strategist at Monex Europe Ltd. in London. “That said, we think the FOMC will steer markets toward a shallower path for US rates than they are currently positioned for with tomorrow’s decision and SEPs, meaning that a partial retracement of the recent EM rally remains our base case.”

Egypt’s dollar bonds rallied after Cairo said Saudi Arabia’s sovereign wealth fund is poised to invest $5 billion, in what would be the latest round of Gulf funding for the North African nation that’s emerging from its worst economic crisis in decades. The nation’s $1.5 billion bond due in February 2061 hit 72 cents on the dollar, the highest in four months, according to data compiled by Bloomberg.

Central and east European countries are beginning to gauge the impact of widespread floods, another blow to economies still reeling from a series of shocks including the energy crisis and global trade disruptions.

The government in Warsaw will prepare a complex reconstruction plan for the affected regions, using funds from the state budget and the European Union, Premier Donald Tusk said. The Czech cabinet signaled it may need to amend the budget, although it didn’t provide a specific estimate of the damages.

This article was provided by Bloomberg News.