What emerging market currencies to buy

Latin American foreign exchange leads the way when it comes to currencies to be bullish about, at least in the opinion of Societe Generale strategists.

In a market note, they said they turned "tactically bullish" on the Brazilian real (BRL) as the authorities are not likely to allow it to weaken too much.

The strategists noted that the Mexican peso (MXN) could also "start looking attractive" after it went through a "mini-correction" recently.

In emerging Europe, the Turkish lira (TRY) is "the most attractive currency" right now.

"The authorities are likely to lean against the wind, which means that the appreciation potential will be fairly limited. However, the TRY offers a very attractive carry and should be well supported by the capital flows that aim at capturing the strong fundamental story," the Societe Generale strategists wrote in a market note.

Last week, Moody's became the second rating agency to raise Turkey's rating to investment grade.

Analysts said this meant that more money would pour into Turkish assets over the medium term as some institutional investors who had stayed away because the country was still rated speculative grade could now boost their investments there.

The Societe Generale strategists are also bullish on the currencies of small frontier market countries, such as Serbia or Egypt.

But they maintain their bearish bias towards emerging market currencies in general, as central banks are in a dovish mood and the eurozone crisis could still spill over, especially in emerging Europe.

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