The Emerging Money EM FX Basket (EMFXB) is a GDP weighted index comprised of the eight most volatile primary currencies in EM.
The currencies are:
- Brazilian Real (BRL, quote),
- South African Rand (ZAR, quote)
- Turkish Lira (TRY, quote),
- Mexican Peso (MXN, quote),
- Indian Rupee (INR, quote),
- Indonesian Rupiah (IDR, quote),
- Russian Ruble (RUB, quote),
- Hungarian Forint (HUF, quote).
With the attention on the current account deficit issues and capital flow risks in EM, investors need to be able to monitor the big picture of this trend across a handful of currencies that each have their own unique macro drivers of performance, yet are considered core proxies for global EM investors.
In many cases these currencies are speculative targets because of their liquidity or because they are representative of the fundamentals confronting EM.
Here is a 6m chart of the EMFXB, followed by a 5 day chart to illustrate the current state of crisis across EM:
We are effectively at 5d lows: