Value emerging in emerging market currencies – Goldman Sachs

Kamakshya Trivedi, Research Analyst at Goldman Sachs, suggests that their deep dive into EM FX valuations suggests that after several years of currency depreciation EM FX looks to be fairly valued or slightly undervalued.

Key Quotes

“Valuations are not a sufficient condition by themselves to turn bullish: we would want to see accelerating growth, fewer imbalances and a better environment for capital inflows as well. But our analysis does suggest that valuation and real carry are turning supportive for EM currencies for the first time in several years, which implies that EM FX could see stability or even a slight appreciation against the Dollar over the next two years.”