A record number of investors think emerging market currencies are undervalued, Bank of America Merrill Lynch`s October fund manager survey found on Tuesday.

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Crumbling under pressure from the strong dollar, along with crises in Turkey and Argentina, developing market currencies have cratered this year. More recently they have been hit by a sharp stocks selloff, leaving MSCI`s emerging currency index down 4.5 percent on the year and 7.4 percent off March peaks.

A net 51 percent of investors surveyed by BAML said they thought emerging market currencies are undervalued - the cheapest valuation since the survey began.

More than 20 percent of investors said the dollar was significantly overvalued, meanwhile, the second highest U.S. dollar valuation reading.

Allocation to emerging market equities rose 15 percentage points, having hit its lowest since March 2016 in last month`s survey. BAML strategists put the increase down to investors betting the U.S. dollar has peaked.

"October rotation shows buying of peak U.S. dollar assets via EM, energy and commodities and selling of cyclicals and growth," they wrote, adding that buying EM assets was a key contrarian trade.

The survey, conducted Oct. 5-11 and canvassing investors managing $646 billion, also found investors were the most pessimistic about the global economy they had been since November, 2008.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)