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GS Still See Attractive Total Returns in BRL, MXN and HUF

EM FX
  • Goldman Sachs still think total returns across BRL, MXN and HUF remain attractive. Of the three, they think BRL has most room to run, although MXN can also retest its recent lows as markets embrace again the possibility of a longer US cycle.
  • On HUF, they think a gradual pace of policy normalisation is unlikely to be FX-negative, especially as other FX fundamentals continue to improve, while COP screens as the most undervalued of the high-carry currencies.
  • Overall, they expect only a shallow and bumpy deceleration in the Dollar, which means that EM currencies with elevated carry can continue to yield positive total returns as long as global growth remains resilient.

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