Grexit contagion will likely be less dramatic now than a few years ago, as banks and companies in most countries have had time to prepare. Despite an agreement at Monday's EU summit, Grexit remains a risk. Increased risk aversion, the Euro-area recovery and the EUR/USD will also have repercussions on EM FX.



Balkans: The Balkans are the only EM economies expected to see a direct effect. They face the largest contagion risk owing to the significant presence of Greek banks. The risk comes from Greek parent banks deleveraging and/or potential deposit flight from Greek subsidiaries. On a positive note, the Balkan economies seem less vulnerable now compared with 2007/2008, so no deep recession is expected as a result of Grexit.



RUB and other CEEs: Short-term negative factors would be limited to increased risk aversion, if anything. The longer-term implications are mainly related to the Euro-area recovery, the strength of the EUR and the appetite to join the EMU. The Euro area is Russia's main trading partner even after the sanctions were posed.



ZAR, Asian and LatAm FX: Might not be directly affected by a potential Grexit. The effects will be indirect through the concerns about Euro-area growth and a stronger USD, says Nordea bank.