Sean Yokota, an emerging-markets strategist at UBS AG in Singapore, commented on the outlook for Asian currencies at a media briefing in Jakarta today.
The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the 10 most-traded currencies in the region excluding the yen, has advanced 1.7 percent this year. India’s rupee strengthened 6.3 percent during the period, while Taiwan’s dollar gained 2.8 percent.
“In Asia, I like the rupee the most. They’ve had a high current-account deficit for quite a while. Equity inflows are outweighing” the current-account issue, he said. “I like Taiwan’s dollar the least. The central bank is very conservative there. Taiwan tends to move its currency at the very end of the business cycle.”
“Looking at high-yielding countries, I don’t expect much more appreciation in their currencies this year. For Asian emerging-market currencies, most of the rebound has happened and things will be fairly stable from now on. More intervention will be the theme for this year.”
“The biggest risk is oil prices, which affects current- account deficits. India is the most vulnerable. The story right now is on the supply side. On the demand side, global growth is still relatively weak.”
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