While market participants are watching a fall in the Russian currency, experts at US investment bank Goldman Sachs are quite optimistic about its prospects. They have even called the ruble one of the most promising emerging market currencies.
The bank's analysts strongly recommend that investors pay close attention to such currencies as the Russian ruble, the Mexican peso, and the South African rand. For example, the peso is attractive in terms of its medium-term risk/long-term reward ratio. Given that the current rate of 22 pesos per dollar is excessively overvalued, the currency will hardly remain at this level for a long time. The ruble and rand are currently deeply undervalued. Both currencies are coming under heavy pressure from internal and external risks. The Russian currency is affected primarily by tumbling oil prices, while the South African rand is under the influence of budgetary problems.
Goldman Sachs believes that the best way to make a profit while trading these three assets is to use a currency carry trade. According to this strategy, investors borrow in a high-yielding currency to fund trades with a low-yielding currency, aiming to capture the difference between the two rates.
