Morgan Stanley: Time to increase exposure to emerging market currencies and...

Yesterday, Morgan Stanley said it is the right time to increase exposure to emerging market currencies and their sovereign hard-currency debt, with the focus shifting to vaccine trading in the aftermath of the US election, giving growing assets a boost.
According to “Reuters,” James Lord, an expert at Morgan Stanley, said in a note to clients, “Emerging markets will participate more fully in the global growth recovery if an effective vaccine is distributed.”
“If this happens, we might see some swap in investors setting up positions away from areas of the global economy that have already recovered (like China) to the rest of the emerging markets,” he added.
Morgan Stanley said he prefers the Brazilian real, the Mexican peso and the Colombian peso, and has entered into credit positions in the South African rand and the Russian ruble.
In credit, Morgan Stanley has enhanced his exposure to South Africa, Brazil, Egypt, Ghana, and Ukraine as well as Mexico’s PEMEX.
In addition, the dollar stabilized against most currencies yesterday after a balanced presidential debate in the United States, but it is heading towards a weekly loss as investors await stimulus talks in Washington and trade negotiations after Britain’s separation from the European Union.
US President Donald Trump adopted a more conservative tone than he had been in the first debate, but Thursday’s debate focused again on dealing with the Covid-19 pandemic and personal insults.
The dollar fell 0.03 percent against a basket of currencies in early trade in Europe, near a seven-week low it reached on Wednesday. The dollar is still down roughly 0.7 percent for the week.
Was little changed in the euro against the dollar at 1.1818, as well as the pound sterling at $ 1.3084.
The safe-haven yen rose about 0.1 percent to 104.71 for the dollar, trimming some of its losses on Thursday after US House Speaker Nancy Pelosi said stimulus talks were making progress.
Hopes that Congress may pass a stimulus package ahead of the presidential election and confidence that spending may follow, regardless of who is elected, has led to a wave of selling in the bond market in anticipation of inflation and government borrowing.
The Chinese yuan also held on to its gains against the dollar after an official in the State Administration of Foreign Exchange in China said that the Chinese currency is more stable than expected, indicating that the authorities are not very concerned about its recent appreciation.
The yuan has gained about 7.5 percent since the end of May as China leads the global recovery from the Corona virus. And it recorded in the last session 6.6884 for the dollar in internal trading, down about half a percent from the 27-month peak it hit on Wednesday.