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CNBC reports that Goldman strategists suggested in their note Thursday that while it may be too early to engage with high-yield emerging market (EM) bets, with risks still prevalent and the dollar on the move, it is not too early to start thinking systematically about opportunities once the crisis subsides.
They identified the Mexican peso (MXN) as the most attractive among “high cyclical beta, high carry longs.” It was closely followed by the South African rand (ZAR) and Russian ruble (RUB).
“The peso remains our top choice in this group: while it appears to have less ‘room to run’ than some other EM high-yielders, this week’s sell-off means that USD/MXN still stands well over 10% higher than its pre-coronacrisis level of roughly 19,” Goldman's Co-Head of Global Foreign Exchange Kamakshya Trivedi and Head of EM Cross-Asset Research Caesar Maasry said in the note. “From a medium-run perspective, the peso’s combination of currency-supportive macro fundamentals and still-high yields make it an attractive choice.”