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Deutsche bank recommended to sell all emerging market currencies over rise in Dollar, especially emerging market Asia and China. So we take a look, how EM Asia has performed in latest Dollar leg and is it fair to go short in all?
This Dollar leg, can be broken in two segment,
The result is shown in figure.
In both of the above scenario, losers have been Chinese Yuan, Srilankan Rupee, and Vietnamese Dong.
Looking at the return and lining the fundamentals,
We would recommend, going short on Chinese Yuan, South Korean Won, Indonesian Rupiah and Singapore Dollar. Fundamental is also falling in line. Weakness in China and rest to suffer due to their large exposure.
Malaysian Ringgit is recommended on the short side but oil price will be a key influence for this one.
We prefer going long on Indian Rupee, against other EM currencies. However China weakness is likely to hit INR too.