e EM currencies UBS View For current exchange rates and CIO forecasts see table Recommendations ¢ With the risk of a Greek Eurozone exit subsiding, we think selected emerging market (EM) currencies Tactical (6 months) ; look attractive over the medium term against the USD and JPY and some even against the EUR. m Several EN currencies look aHractive at ¢ Global growth prospects remain intact, also due to recent policy easing in China, and the risk of a current levels; “e advise Investors to broader European crisis remains contained, in our view. Over the medium term, this will likely support EM gradually increase their SAPSSUNS ie Gur currencies. However, further bouts of volatility remain likely in the months ahead, since negative headlines preferred EM currencies, using the yen from Europe will likely continue to weigh on investor sentiment. and tre LISD as funciing currencies. Our ¢ Our tactical and strategic recommendations list our preferred currencies. For now, we remain cautious on preferred EM currencies are CNY, IDR, the Brazilian real, Hungarian forint, Indian rupee, and Turkish lira. KRW, SGD, MXN, ZAR, CZK, and PLN. Strategic (1 to 2 years) A Positive scenario > 7% outperformance of EM FX against G4 currencies over a 6-month horizon °° We recommend EM currencies backed by ¢ Macroeconomic data comes in stronger than expected and contagion risks in Europe subside further. EM stable fundamentals a5 a Strategy to exchange rates could appreciate swiftly against G4 currencies (USD, EUR, JPY, GBP). diversify currency exposure. | . . |. ; ; ; ¢ Our favorites include the Chilean peso, & Negative scenario > 4% depreciation of EM FX across regions against USD over a 6-month horizon €vach keruna, Palish lore Chinese ' y, ¢ Global growth prospects suffer a prolonged deterioration and the European debt crisis intensifies renminbi, Korean won, Malaysian ringgit further. EM exchange rates could see a significant, although likely temporary, sell-off across regions. and Si