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Emerging market currencies should be much more expensive – Bloomberg Economics

Undervalued / overvalued map of world currencies according to Bloomberg Economics. The redder, the more underestimated, and the blue, the more overvalued. Source: Bloomberg

The currencies of developing countries are valued the least fairly, analysts at Bloomberg Economics write, citing their model, which calculates “fair” exchange rates based on fundamental economic indicators.

The most underestimated are turkish lira and Brazilian realwhose rates are more than 30 percent lower than the equilibrium rate *, and the most overvalued (by 26%) – Czech crown.

* exchange rate of the national currency providing a zero balance of payments

Russian ruble is included in the group of currencies that are traded 10-30% below the “fair” rate.

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Key world reserve currencies, dollars and euros, are overvalued by 5-10%, but generally close to “fair” rates.

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