Morgan Stanley has decided to capitalize on the recent collapse of the Russian ruble and open long positions on the undervalued currencies with the potential for a good ride. “Emerging-market currencies have lagged, but with growing conviction that the dollar has turned, we think that a catch-up is under way," James Lord, the head of emerging market strategy at Morgan Stanley, said. Moreover, traders praise this strategy as the bank is buying up these currencies at lower prices.
The Wall Street bank said it added Brazil’s real, Mexico’s peso, and Colombia’s peso to its portfolio and opened long positions on South Africa’s rand and Russia’s ruble. Currently, they are at the bottom. However, these assets, including the ruble, are projected to bounce off in the near future. Besides, Morgan Stanley from time to time adds new currencies to the list of potentially attractive ones. Big investors from Wall Street are opening long trades on these currencies waiting for their rebound. Additionally, market turbulence is gradually easing as the election race in the United States will soon end. Traders are poised for any outcome of the vote, which means that they can resume active trading. “We stress that, while the outcome of the election of course remains uncertain, for those who wish to position for a Democratic win, risk/reward for EM looks compelling especially in the case of a united government, which could result in sizeable stimulus and a more consistent set of economic policies,” James Lord said.
Notably, Morgan Stanley is not the only bank that is preparing to strike gold on the Russian ruble. Earlier, Goldman Sachs strategists named the ruble one of the three most attractive currencies for investors in the emerging markets (EM) along with Mexico’s peso (MXN) and South Africa’s rand (ZAR).
