Correlation between the Bric (Brazil, Russia, India and China) currencies has blown out over the past six months, increasing the cost of structuring Bric-basket trades. High charges have meant investors have chosen to tweak emerging-market exposures by trading baskets of alternative currencies, including the Indonesian rupiah, Malaysian ringgit and Turkish lira.

"Whereas the emerging market trade has traditionally been played through Bric baskets, other currency baskets are gaining a lot more traction because of the extent to which investors have ploughed into Bric over the past six months," said one head of forex structuring in London. "This has blown out a lot of the correlations and made it prohibitively expensive to enter into that trade."

Correlation between Bric currencies has risen steadily since the onset of the crisis as investors have allocated heavily in favour of emerging markets rather than G-10 currencies, with the view that developed-world countries are laden with debt and have lower potential growth rates.

Average six-month Bric correlation has increased from 16.4% on December 31, 2007, to reach 20.2% on July 14 last year and 37.9% on August 25, according to Deutsche Bank. Correlation remained above 20% until the end of February this year and priced at 19.7% on March 4. On the same dates, six-month Bric excluding Chinese renminbi correlation priced at 21.9%, 32.6%, 51.5% and 38.9%, respectively.

Meanwhile, dealers are also advising investors to pitch emerging market baskets against alternative currencies. Typically, emerging market baskets have been played against the dollar, but some dealers are touting the yen as an alternative. "We think the yen is going to be hampered by the fact it will be once again be used as a funding currency," said one forex dealer. "Now the breakdown of the carry trade has subsided, we are bullish on USD/JPY, particularly if the US Federal Reserve starts to raise rates."