At the recent Reuters Investment Outlook Summit, forex was a popular topic of discussion among the investment strategists in attendance. Specifically, many of the participants were bullish about emerging market currencies. This is somewhat ironic, since these currencies have marked one of the few bright spots for the Dollar, which has benefited from a recent trend towards risk aversion as a result of the credit crisis. In addition, the Fed is certainly finished with its current cycle of lowering rates, and may in fact hike rates as early as this year. However, the experts insist that this will be offset by corresponding rate hikes in emerging markets, which are beginning to come to terms with surging inflation. The currencies of Brazil and Malaysia were singled out because they both benefit from rising commodity prices. In addition, all of the BRIC countries (Brazil, Russia, India, and China) and Mexico, continue to be favored by currency investors. Reuters reports:
A decade of fiscal discipline, political stability and export diversification is also likely to help the Mexican peso in the near term, said...a managing director for foreign exchange products at BMO Capital Markets.
Read More: Emerging markets forex rally still has legs
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