FX.co ★ Deutsche Bank names zloty most undervalued currency

Recently, Russia has been squeezed out from leading ranks by international supervisory committees. Currently, Russia has been involved into two Olympic scandals. Russian Olympic winners are accused of drug cheating on the grounds of positive drug tests, so they could be deprived of their gold medals. The Russian currency has topped the anti-rating as the most undervalued currency in the world for long. However, this dubious achievement has been challenged by Deutsche Bank's Global FX Research team.

According to experts at Deutsche Bank, the Polish zloty today is “the cheapest currency in the world”. The analysts say that the zloty is undervalued by about 10%. Interestingly, the Russian ruble was recognized as the most underperforming currency a month ago. Indeed, the ruble was trading at 73 against the US dollar. Since then, the Russian currency has risen in value to 64 against the US dollar. Experts assess dynamics of forex rates with the use of BEER (Behavioral Equilibrium Exchange Rate). This criterion allows analysts to gauge a deviation between an actual forex rate of a particular currency and an economic situation in this country.

As for the new leader among undervalued currencies, Deutsche Bank expects the zloty to strengthen in the near future as Poland’s economy is set for robust economic growth. The think tank believes the economy can expand 3.5% in both 2016 and 2017. Besides, the zloty gains support from strong PMIs, record low unemployment rates, and stable wages growth. The outlook of the German team corresponds to the latest forecast of the European Commission. What currency will be number one in this anti-rating? Time will show.