Morgan Stanley's VIRP model, which buys / sells signals, maintains long position recommendation in Turkish Lira
The South African Rand, the Turkish Lira and the Brazilian Real may be among the worst performing market currencies of last month, but Morgan Stanley has not lost hope.
The VIRP model, which produces buy / sell signals based on the bank's volatility and its unique risk premiums, is still keeping its long position in this currency despite the rupture of the rally in EM assets due to rising geopolitical risks and the US-China trade dispute.
Andres Jaime, a Morgan Stanley quantitative strategist in New York, noted in a customer note, karşın Despite the recent pause in the EM rally, the model remains positive in the asset class, with the dove of key central banks and expectations of further progress in the trade war. We acknowledge that EM risk premiums are decreasing and that weaker dollar is needed to trigger the second rally in EMs.
According to Jaime's note, Morgan Stanley's model is close to producing sat sat signaling when he points to a short position in Colombian Peso, Malaysian Ringgit, Indonesian Rupee and Thai Baht. However, Jaime underlines that signals should be used as input for investment decisions rather than as a regular trading strategy.
Bloomberg News
