BRIC currencies set to snap losing streak

All four BRIC currencies - the Brazilian real, Russian rouble, Indian rupee and Chinese yuan - will recoup at least some of their recent heavy losses over the next 12 months, a Reuters poll showed on Wednesday.
The latest Reuters BRIC FX survey showed the real, rouble and rupee recovering slowly after diving more than 10 percent against the dollar over the last three months, as low borrowing rates in sluggish developed economies force investors to seek yield in dynamic emerging markets.
The rouble and rupee, will take the lead, expected to gain more than five percent and six percent, respectively, according to the median estimate of around 70 analysts, economists and strategists polled by Reuters.
The yuan is expected to rise more than 4 percent and real only about 2 percent over the next year. The outlook for the rouble and real has taken an about turn since the last poll in July, when strategists predicted falls for the currencies over a 12 month horizon.
For the current consensus to come true, however, Europe will have to solve the crisis, said Win Thin, global currency analyst with Brown Brothers Harriman, the largest privately owned US bank, in New York. That looks far from certain right now. "The BRICs are vulnerable to a big blow-up if Greece defaults and Europe melts down, but the emerging markets always come back and right now they just offer more promise than developed markets," he said.
"Once the dust settles it seems like the natural flow will be to the BRICs and other emerging markets," said Thin, whose bank expects emerging markets to strengthen over the next year.
For all the currencies but the yuan, the threat of a Greek default and resulting withdrawal of funds from higher-risk emerging markets to lower-risk dollar investments has led to sharp losses in recent months. The rouble also weakened after S&P downgraded the US sovereign debt rating in early August. However, with Brent crude oil still above $100 per barrel, the Russian central bank has sold more than $10 billion of dollar reserves since early September, helping the rouble to bounce back versus the greenback from 32.90 - its weakest level since August 2009.