Currency Risk Factors in Emerging Markets

As a portfolio manager for a global investment firm, you are tasked with assessing the currency risk factors impacting the firm's investments in emerging markets. The firm is considering an allocation of capital into several Asian economies following their recent economic growth.

Discuss the primary currency risk factors that you need to consider in this context. In your answer, provide examples of how these factors can affect investment returns in foreign currencies and the strategies that can be employed to manage these risks effectively.