The U.S. dollar is likely to be the winner among currencies once a "great rotation" from bonds into equities gets underway, analysts at Bank of America Merrill Lynch said on Wednesday, while the Brazilian real could be among the worst hit.
A record amount of cash has moved out of bond funds since May 22, when the minutes of the Fed's policy meeting signaled the bank could start scaling back its bond-buying program. The yield on the U.S. 10-year benchmark Treasury has risen to 2.7 percent, with interest rates around the globe also creeping higher.
(Read More: Great rotation still a 'long way' off)
Bank of America Merrill Lynch has likened this recent flow out of bonds as a "mini rotation" and called it a perfect learning environment to see the U.S. dollar will push higher if a "great rotation" does take place. The bank argues that we are currently at the beginning of a "great rotation".
Analysts remain divided however over whether you should believe the hype surrounding one of the big investment shifts of 2013. According to U.S.-based TrimTabs Investment Research - which tracks stock market liquidity - money coming out of bonds is now going into savings deposits or money market funds.
The bank used recent tick higher in bond yields to calculate which currencies could do well if funds start to see severe flows into stocks.
(Read More: The 'Great Rotation'—Is It Finally Happening?)
"The U.S. dollar is likely to be the best-performing currency. U.S. bond outflows are likely to be of similar magnitude with that in the rest of G10, but the U.S. dollar may benefit from stronger equity inflows. Equity flows into Japan may be even stronger than into the U.S., but to a large extent (that) is likely to be driven by a weaker Japanese yen to begin with," the currency research team at Bank of America Merrill Lynch said in a note on Wednesday.
Currencies in countries that have experienced the largest equity inflows and the smallest bond outflows since the Fed tapering debate started should do well when the great rotation takes place, it said.
(Read More: Why Talk of a 'Great Rotation' May Be Overblown)
The worst-performing currencies are likely to be in emerging markets (EM), it said, adding that all emerging markets, with the exception of Israel and Columbia, have experienced both bond and equity outflows since the Fed tapering debate started.
Currencies that could be particularly vulnerable include the Brazilian real, the Chilean peso, Thai baht, Chinese yuan, Russian ruble, Turkish lira, the Indian rupee and the Malaysian ringgit, it said.
By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81