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26 Feb 2015
Outlook for EM FX, plenty long opportunities – BAML
FXStreet (Barcelona) - The BofA-Merrill Lynch Team, shares the outlook for Emerging market currencies based on the signals from their Compass30 FX model.
Key Quotes
“In Asia, we recommend longs in INR against MYR given the diverging impact of declining energy prices.”
“We also like short EUR/IDR given Indonesia’s improving energy trade balance and its disinflationary trajectory.”
“We are bearish on the KRW, TWD and SGD as we expect a further JPY depreciation to be met with weaker FX policies.”
“We do not expect China to depreciate CNY despite nondeliverable forward pricing. CNY depreciation could exacerbate FX outflows and do more harm than good. We recommend shorting 12m USD/CNY NDF.”
In EEMEA, we remain long TRY against ZAR and a basket of EUR and USD."
“In LatAm, MXN is the only currency we expect to appreciate in 2015. We recommend short PEN/MXN and EUR/MXN and USD/MXN put spreads.”
Key Quotes
“In Asia, we recommend longs in INR against MYR given the diverging impact of declining energy prices.”
“We also like short EUR/IDR given Indonesia’s improving energy trade balance and its disinflationary trajectory.”
“We are bearish on the KRW, TWD and SGD as we expect a further JPY depreciation to be met with weaker FX policies.”
“We do not expect China to depreciate CNY despite nondeliverable forward pricing. CNY depreciation could exacerbate FX outflows and do more harm than good. We recommend shorting 12m USD/CNY NDF.”
In EEMEA, we remain long TRY against ZAR and a basket of EUR and USD."
“In LatAm, MXN is the only currency we expect to appreciate in 2015. We recommend short PEN/MXN and EUR/MXN and USD/MXN put spreads.”