EM currencies the way to play gap with debt-ridden Western market

Emerging market currencies have rallied strongly after a rough opening to the year. Globalisation, the structural driver for the asset class, continues.

Most emerging markets approach the end of the year with stronger sovereign balance sheets and intact banks. Now the world is recognising just how much stronger most emerging markets are relative to their developed counterparts. The economics are fairly clear: beyond the Middle East and the former communist countries of Eastern Europe, emerging markets are not having a financial crisis but an unusually nasty cyclical recession. No Latin country and only South Korea in Asia has had to use government money to recapitalise banks. Recessions caused by banking crises are generally up to a y...