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MUFG Views: EM FX: overall fundamentals.......>

FOREX
FOREX: MUFG Views: EM FX: overall fundamentals still supportive for currency
strength Emerging market currencies have suffered a sharp sell-off alongside the
recent rebound in the US dollar. JPMorgan's emerging market spot index fully
reversed recent gains in September leaving it roughly flat in Q3. Nevertheless,
the fundamental backdrop for emerging market currencies on the whole still
appears supportive for currency strength. Data from NN Investment Partners has
revealed that credit growth has accelerated to an annual rate of 8.7% based on a
gross domestic product-weighted average of emerging economies excluding China.
The IMF noted the current period of "abundant credit supply" in emerging markets
due to higher financial flows and a recovery in risk appetite. Overall, we still
believe that current fundamental conditions remain supportive for emerging
currencies. As a result, we will not be throwing the towel in yet on our bullish
call for emerging market currencies in the year ahead, despite the recent sharp
pullback.

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