Emerging Europe

Emerging market currencies the Fed can't touch

Hungary a 'bastion of stability': HSBC's Bloom

Hints from the U.S Federal Reserve that it could be looking to curb its bond-buying program have been enough for some foreign currencies to fall, but David Bloom, the global head of foreign exchange strategy at HSBC has detailed those that would survive any flight back to the dollar.

"Poland, Hungary, Czech, they've done phenomenally well down when emerging markets have got burnt," he told CNBC Thursday.

"They've been a bastion of stability in the whole emerging market world."

(Read More: Are the cracks in the euro starting to show?)

Yields on 10-year benchmark U.S. Treasurys rose above 2 percent on May 22, after the Federal Reserve's policy minutes sparked fears the central bank could start tapering off its $85 billion-a-month bond purchasing program.

Shortly after, emerging market (EM) currencies began to tumble as investors started to bringing their dollars back to the U.S. in the view that interest rates would move higher. For instance, South Africa's rand tumbled 6 percent against the dollar in a month, the Indian fell 24 percent in three months and the Malaysian slipped 10 percent in three months. Meanwhile, the yuan, the Vietnamese dong, the Russian ruble, the Mexican peso and the Brazilian real all clocked-up declines against the dollar this year before stabilizing.

Meanwhile, the Polish zloty, the Hungarian forint and the Czech koruna were relatively untouched and in some cases actually appreciated against the dollar.

(Read More: Confused about Fed tapering? Don't be)

The reason behind this robustness is their balance of payments, said Bloom. A healthier balance sheet and less debt compared with other emerging markets means that he would look to buy these currencies, despite their central banks toying with the idea of a rate cut.

"They learnt their lessons form 2008, they are in very good positions and their currencies have held up phenomenally well," he said.

(Read More: Hungary central bank '100% independent')

"When you look at the EM and you look at Indonesia and India and Turkey and the rand, these currencies, you, know, Poland looks great. I'm not worried about a 50 basis point rate cut...what I am worried about is that the Fed does tapering and we have another massive lurch in EM and Poland holds steady."

The Hungarian forint famously plunged 75 percent against the dollar in 2008 over a five month period. The global financial crash took its tool on the country, with many having their mortgages denominated in the Swiss franc meaning they struggled to service their increasing debt load as the forint tanked.

But Bloom says in this new economic environment, the forint and its Eastern European peers are stable and have held up well since the financial crisis and amid tapering talks.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81