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Are emerging market currencies now undervalued?

Almost all emerging market currencies have depreciated further against the dollar over the past month. Looking at the real effective exchange rates of emerging markets, 20 of the 24 currencies we cover now look “undervalued” relative to a 10-year trend. Meanwhile, sharp falls in equity prices have left price/earnings ratios on emerging market equities even lower relative to both their own historical averages and those in developed markets.

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