EFTA Document EFTA01451215

9 January 2014 FX Blueprint: Thin end of the wedge History provides us with good templates of economies where oil/gas findings resulted in a significant contribution to the BoP and persistent appreciation (NLG & NOK). Also, Bol governor Hug acknowledged as much on Nov 19th when she argued that the current intervention policies are only "acting to give the business sector time to adjust to the trends derived from [long term economic) forces". Buy 1LS vs USD, targeting 335 with a stop @ 35750 Having reduced rates aggressively since mid 2012, the NBH adopted a more conservative policy approach, with financial stability moving back up the agenda. Real yields remain among the most attractive globally. retail sales are growing YoY, the PMI firmly is in expansionary territory, unemployment has fallen and the C/A balance is in surplus. Be long HUF vs EUR, targeting 290 with a stop @ 305 While the ruble trend has been highly negative over the past few months, favourable seasonality going into Feb/Mar and bearish positioning make us cautiously constructive around current levels. The relatively low balance sheet risk. attractive carry. CBR's strong anti- inflationary policy stance, and a robust surplus in the goods balance are other supportive factors. Buy RUB vs EUR, targeting 4310, stop @ 45.90. ZAR is cheap but arguably not yet sufficiently, and in the absence of any meaningful improvement in the external balances there is scope for further weakening in a rising interest rate environment. C/A fundability remains the key risk, with exports so far showing few signs of improvement from past currency weakness. Even so, there has been some response to stronger demand from abroad and with global growth continuing to improve this should be reflected in gradual rand stabilization. Key levels are: a) 10.85, where price action according to our metrics would be severely stretched and thus raise the probability of a significant snap-back, and b) 10.40, which represents the lower end of the more recent channel. On a break of either, target a 3% move in USD/Z4R to 1050 or 10.10 respectively. Turkey's lira remains vulnerable to a tightening of global liquidity due to its sizeable C/A deficits and/or short-term external debt repayments in an environment of rising global yields. Add to that ongoing domestic political uncertainty and TRY should remain under pressure. Stay long USD/TRY, target 2.250, stopping at 2.1350. Mena' Gaither°, London, +tall 20754 59847 Page 18 Strong and persistent FDI inflows into Israel 4 - 3- 2 G 1 9 o - 4-1 et2 - 2004 2006 2008 2010 2012 — Net Transact-ens, Direct Investment vi Israeli Direct Investment Abroad ■ Foreign Direct Investment Sans Deasek•annit EtbIntholifinanc• LP Hungary C/A in surplus and growing 1.0 - 0.5 - o.o to.5 - to - its - 2.0 - -2.5 -r 1 AIL 1998 2000 2002 2004 2006 2008 2010 2012 — 12m MA re Balance San Punt.* &ink Ha:nen Awn, O> Turkey's narrow & broad bask balances (12m rolling) 0- 5-1 -4 3-s -6 2005 ?Prism 2007 2009 2011 2013 — TRY NEEft, Ms • Broad Basic Balance (CM • FDI • Port(oIo lows). In o Narrow Basic Balance (C/A* FOIL Ins Sane veva:P.arm. akwereteg ',nonce In -130 - 120 Deutsche Bank AG/London CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0107540 SDNY_GM_00253724 EFTA01451215