Deutsche Bank's currency strategists have identified four emerging and developed-market currencies they favor for long positions: the Swedish krona, South African rand, Chilean peso and Indian rupee. The bank's recommendation is conditioned on oil again moving through the Strait of Hormuz in larger volumes, a development the strategists say would support rallies in these currencies.
"The more super-tankers can start moving through the Strait of Hormuz full of oil and the quicker they do so, the more we think these currencies should rally," the strategists wrote in a note on Monday. They added that these long exposures can be financed against either the dollar or the euro, and that their current EUR/USD stance is neutral, prompting a preference for a funding mix that uses both currencies.
On the Swedish krona, the bank points to stronger domestic economic performance relative to regional peers that, in their view, is not yet fully reflected in the currency. The strategists note that the krona moved sharply higher on Monday, climbing more than 1% against the U.S. dollar and emerging as the best performer among the Group of 10 currencies that day.
For the South African rand, Deutsche Bank cites a potential rebound in gold prices combined with an improving domestic backdrop as factors that should support the currency. The strategists specifically mention gold's recovery as a contributing force that would lift the rand.
The Chilean peso is described as one of the largest underperformers relative to its aggregate terms of trade, with positioning skewed to the short side. The bank's note says that with oil receding and copper prices remaining elevated, Chile's balance of payments should materially improve, a dynamic the strategists expect to help the peso recover.
The Indian rupee is listed among top currency picks in the event of a US-Iran peace deal. Deutsche Bank points to Reserve Bank of India policies that would support both near-term inflows and longer-term structural demand for the rupee. The strategists also observe that the market is currently positioned short on the rupee, which they note is sensitive to movements in oil prices.
The bank's overall approach emphasizes the link between improved oil flows through the Strait of Hormuz and the expected currency rallies, while recommending flexibility in funding these long positions by using both the dollar and the euro given their current neutral outlook on EUR/USD.
Market data cited in the bank's note included recent moves in key pairs and commodity prices. The strategists highlighted the krona's strong performance against the dollar and referenced gold and copper as market drivers relevant to the rand and peso, respectively.
Deutsche Bank's recommendation combines macro drivers tied to oil logistics with country-specific fundamentals and current market positioning. The firm suggests tactical long exposure in the four currencies, funded by either or both of the major reserve currencies, until clearer directional cues emerge from oil flows and currency positioning.