16 Jan 2014
Flash: Asian currencies to continue stuck in a rut - HSBC
FXstreet.com (Bali) - According to HSBC Research Team, in the Asian FX complex (AXJ) this year will be about the survival of the fittest, with preference for North Asian currencies relative to the rest of the region.
Key Quotes
"Many Asian currencies were stuck in a rut in 2013 and this will likely be the case in 2014 too. We had factored in a temporary recovery for Asian currencies in Q1. But the risks are rising that this strength does not materialise or, if it does, it will be short-lived."
"Beyond this period we still anticipate that challenges for a number of Asian currencies will become more apparent. For instance, lower growth potential, weakening current accounts, lower portfolio inflows, signs of overvaluation for some currencies and low yields for others do not create a lot of optimism."
"Taking into account such downside risks, this implies that many Asian currencies will be exposed to periods of higher volatility in 2014. In turn this means that monitoring the FX policy reaction for currencies facing downward pressure will become even more important."
"The days are long gone when Asian currencies would be treated similarly and it was only about looking to sell or buy USD-Asia. We are most cautious on the IDR, THB, MYR, and INR, which in general have more challenging BoP and IIP positions."
Key Quotes
"Many Asian currencies were stuck in a rut in 2013 and this will likely be the case in 2014 too. We had factored in a temporary recovery for Asian currencies in Q1. But the risks are rising that this strength does not materialise or, if it does, it will be short-lived."
"Beyond this period we still anticipate that challenges for a number of Asian currencies will become more apparent. For instance, lower growth potential, weakening current accounts, lower portfolio inflows, signs of overvaluation for some currencies and low yields for others do not create a lot of optimism."
"Taking into account such downside risks, this implies that many Asian currencies will be exposed to periods of higher volatility in 2014. In turn this means that monitoring the FX policy reaction for currencies facing downward pressure will become even more important."
"The days are long gone when Asian currencies would be treated similarly and it was only about looking to sell or buy USD-Asia. We are most cautious on the IDR, THB, MYR, and INR, which in general have more challenging BoP and IIP positions."