EM FX:EM FX Scorecard update,RUB and BRL leading the pack

We update our EM FX Scorecard, which ranks 22 currencies from most to least attractive on the basis of a number of factors that are generally considered as important drivers of EM FX. The motivation behind the scorecard is (1) to present a consistent quantitative framework that enables comparison across the spectrum of EM currencies; (2) to provide a rules-based overlay to a range of our existing frameworks that capture the various dimensions of EM FX Strategy. The scorecard is displayed below. In sum, it is divided into two halves. The left half captures 5 macro variables that tend to impact currencies over a longer horizon, while the right half captures 5 financial/technical variables that impact currencies over a shorter horizon. More details on the construction of the scorecard, including the variables used, are provided in the appendix. Note that we have made some amendments in this iteration of the scorecard. In order to add a forward-looking aspect, we incorporate variables like 1-year ahead ex ante real rates and forecasted inflation for the coming months. We have also incorporated foreign positioning in local currency bonds.