×

Four bright spots in EM currency universe: Goldman

Frank van den Bergh | E+ | Getty Images

When the dust settles after the Federal Reserve's rate decision, investors will shift their focus back to fundamentals, says Goldman Sachs, highlighting the Mexican peso, Indian rupee, Czech koruna and Polish zloty as bright spots in the emerging markets currency space.

"[These are] the only bright spots where the real business cycle is still operating at a solid pace," the bank said in a note.

Emerging market currencies, from the Brazilian real to the Turkish lira, were hit by relatively indiscriminate selling over the summer amid jitters over the prospect of Fed tightening as well as China's surprise currency devaluation.

However, as Goldman points out, not all emerging market currencies are made the same.

The four currencies are "better medium-term stories given that they are also less directly affected by China concerns relative to other Asian and commodity currencies," it said.

In the bank's own words, here's why it has circled them out:

Mexican peso: "In Mexico, a gradually improving labor market, strong fixed investment and an expansion in non-oil exports all point to a relatively solid non-oil economy, but it will be hard for the MXN to reflect this without some stability in oil prices."

Read MoreChina impact on emerging markets is overstated: JPM Strategist

Indian rupee: "Activity data have also been a bit better in India from disappointing levels: industrial production was better than expected and our current activity indicator improved in Q2 to 5.1%qoq sa annualized from the surprisingly weak 4.2% in Q1; and while legislation on GST reform has stalled, there has been important progress on banking reform."

Czech koruna and Polish zloty: "Despite the tick down in the latest PMI reading in Poland, the momentum of real GDP growth has been on an improving trajectory in Czech Republic and Poland, with output gaps closing on the coattails of the Euro area recovery."