Misalignments Are Biggest for Emerging-Market Currencies

Emerging-market currencies are the most mispriced, according to a Bloomberg Economics’ model that estimates fair values based on economic fundamentals. The Turkish lira and the Brazilian real are more than 30% below their equilibrium rates, while the Czech koruna is 26% too expensive relative to what the fundamentals suggest and the Philippine peso is 16% above where it should be. The world’s major currencies -- the U.S. dollar and the euro -- appear close to fair value.