Relative resilience of EM FX in the risk selloff – Goldman Sachs

Kamakshya Trivedi, Research Analyst at Goldman Sachs, suggests that after starting the year on the back foot, EM FX has been relatively n resilient ytd even in the midst of the global sell-off in risky assets over the past month.

Key Quotes

“We attribute this relative resilience to the local rebound in oil prices and the local stability in the CNY fixes (and CNH) since mid-January. In the medium term, valuations for EM FX have moved to more supportive levels with our models providing strongest undervaluation signals for RUB, MXN and PLN.

Looking ahead, we expect China-exposed EM currencies (including KRW, MYR, THB) and non-oil commodity producers (including CLP, ZAR and PEN) to underperform.”