The rupee's rally against the Singapore dollar, Thai baht and even the Indonesian rupiah, which along with the rupee was severely hit during last year's volatile selloff of emerging markets, is evidence of investors cherry picking.
Being long the rupee against other Asian currencies is a top trade for analysts at Citi. Morgan Stanley's Asia analysts recommend likewise.
Analysts at HSBC reckon north Asian currencies such as Korean won and China's yuan could outperform the South Asians, but they also like relative value trades that play off the rupee or won against the Thai baht or Indonesian rupiah.
"These relative value trades are a quicker way to express a relative macro view within Asia and how that can impact Asian currencies, than just a specific dollar-centric view," said Paul Mackel, head of currency strategy at HSBC in Hong Kong.
via Reuters