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Worst is over for Russia, cautious on Turkey and South Africa - UBS

FXStreet (Delhi) – Research Team at UBS, suggests that according to investors have got increasingly more comfortable that the Russian economy has got through the worst, although reservations about the longer term growth prospects remain.

Key Quotes

“Our general observation is that many investors continue to see relative performance in the region challenged by low growth, the strong US dollar and the normalization of US monetary policy (even though our house view of 225bps in rate hikes until end-2017 from the US Fed was taken as rather hawkish), and the lack of visibility about the recovery in commodity prices. Outflows from EM funds also continue to be a worry.”

“Investors had more concerns about South Africa and Turkey, where financing of the wide current account deficits will likely become more challenging at a time of rising US rates, putting more pressure on the TRY and ZAR to weaken. Poland and Greece came up frequently as well following the Polish election and the ongoing bank recapitalization in Greece, whereas the interest in other markets was more sporadic.”

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