The values of most currencies in the "frontier markets," which include Ukraine, Kazakhstan and Nigeria, are "significantly overvalued," Bank of America Merrill Lynch said on Tuesday.

"In contrast to EMFX [emerging market foreign exchange], which is largely floating and has adjusted a lot, most of the frontier FX still is pegged and thus at risk of disorderly devaluations," the bank said in a report. "Indeed, while EMFX is now around fair value and strains seem to be easing, lately shoes have started to drop in frontier: Ghana, Kazakhstan, Nigeria, Ukraine -- to name a few."

FX chart Many emerging market currencies are overvalued. Photo: Bank of America Merrill Lynch Global Research

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The biggest overvaluation exists in Mozambique, Uganda, Tanzania and Rwanda, which run current account deficits of 12 percent to 40 percent of gross domestic product, the bank said.