(Jan 16): Mohamed El-Erian, Allianz SE’s chief economic adviser, said investors willing to withstand short-term price swings would do well to bet on a rebound of currencies outside the world’s largest economies.

"If you have appetite for lots of volatility and you are able to maintain your position, then foreign exchange in emerging markets is attractive,” he said Friday in a Bloomberg Television interview. “You have to put it in that part of your portfolio that can tolerate significant volatility.”

The Mexican peso fell to a record low Wednesday and was headed for its fifth straight weekly decline on speculation that the nation’s economy will be hurt by U.S. President-elect Donald Trump’s policies. The Turkish lira also plunged in recent months, along with currencies in Argentina and Malaysia.

“They have overshot in many cases,” said El-Erian, who is also a Bloomberg View columnist. They will eventually “come back, but it’s going to be an incredibly volatile issue."

Trump won support by faulting free-trade deals that he blamed for costing U.S. jobs. The possibility that he follows through on campaign promises with policies that stifle international commerce is “one of the major risks for 2017,” El-Erian said. Still, Trump hasn’t been as vocal on the issue since winning the election, the economist said.

‘Rhetoric has Softened’

“So far the rhetoric has softened,” El-Erian said. “And that’s why markets have embraced the pro-growth element and set aside the trade protectionism.”

Equity markets surged in the weeks after Trump’s election on optimism that stimulus policies, including infrastructure spending supported by President Barack Obama, a Democrat, may finally win support from a Republican-led Congress. The rally stalled, however, as the Dow Jones Industrial Average failed to reach 20,000, after first passing 19,900 on Dec 13. Investors are still impatient, as they await more specifics about Trump’s plans, according to El-Erian.

“ Valuations are quite high,” he said. “So that’s why you need continuous fuel into the stock market in order for stocks to go higher.”