Political risk on radar in EM currency trades

Traders recommend investors to short S. African rand

SINGAPORE: South Africa’s unfolding turmoil is putting emerging-market (EM) political risks at the fore, and traders are hunting for currencies vulnerable to political hazards and playing them off against their more stable peers.

Citigroup Inc and Deutsche Bank AG were among the lenders recommending investors to short the South African rand last week as deadly riots threatened to derail an incipient economic recovery. Chile’s peso is also seen as vulnerable relative to more stable currencies such as the Russian ruble.