Buy BRIIC, Sell Dollar

No, its not a typo.  I added Indonesia to my emerging markets places to invest - thus BRIIC. 

Goldman Sachs has recently come out with a buy recommendation for the BRIC currencies, even though they are overvalued according to their currency models.  Strong economic growth should propel them forward even as the rest of the developed world is struggling to find their way.  What a good time to be in a poor underdeveloped country! 

I would add that they need to add one country to the BRIC, Indonesia.  They are making positive democratic changes and liberalizing their once government driven economy.  The BRIIC (BRIC + Insdonesia) countries will be the places for future growth as we highlighted previously because of their catchup-edness, their increasing economic freedom (with the exception of Russia) and population growth (See http://bit.ly/drTwlj). Bloomberg reports (See http://bit.ly/cRIJ7E).
Goldman is advising clients to buy the real versus the dollar, bet on gains in Asian currencies including the rupee against Japan’s yen and purchase Russian stocks to benefit from ruble strength.

“All BRIC currencies are currently overvalued” in Goldman’s long-term valuation model, Stolper said. “And yet we expect them to get even stronger.”

Goldman is bullish on emerging-market currencies after a rally during the past year pushed the real up 29 percent against the dollar and spurred an 18 percent gain in the ruble. The International Monetary Fund forecasts developing-nation economies as a group will expand 6 percent this year, leading the global recovery, compared with 2.1 percent for advanced economies.

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