| Don't underestimate his strong
dollar policy |
 |
| Source: Deutsche
Bank |
|
Searching through emerging-market currencies for investment
opportunities is a tricky job - a delicate combination of
subjective judgement and fundamental analysis.
Luckily, plenty of currency pundits were on hand at Euromoney's
forex forum last month to help investors and corporate hedgers
choose a strategy.
Avoid commodity-dependent Venezuela, advised Juliette Declercq,
a strategist from JPMorgan. Watch out for a sharp improvement in US
economic conditions, warned Robert Kahn from Citigroup. Go long the
South African rand and the Hungarian forint, urged others.
One panellist raised a laugh when he neatly summarized what many
are now thinking. "The US is looking like an emerging market,"
quipped Ruchir Sharma, a managing director at Morgan Stanley
Investment Management. "And emerging markets are looking more like
the US."
He wasn't entirely joking. Capital is flowing back into emerging
markets for the first time since the last great stock market
bubble. Meanwhile, the dollar is collapsing. The US is running a
spectacular trade deficit. According to a US Treasury report leaked
last month, current economic policies risk causing a budget deficit
as high as $44 trillion.
And it is increasingly reliant on foreign capital. Cynics might
suggest that all that the world's only remaining superpower needs
to complete the image is an unelected president.