Fitch: Asian currencies resilient against higher US Treasury yields
The Asian currencies have proved resilient against the US dollar and strengthening Treasury yields throughout the coronavirus pandemic crisis, Fitch Ratings said in its latest report published on Friday.
Additional takeaways
“The region's currencies have been supported by China' strong economic recovery, particularly the Australian dollar and Korean won, while high commodity prices have provided tailwinds for the Australian dollar and Indonesian rupiah. Lower external imbalances in Indonesia and India have better supported the countries' currencies during the recent episode of market volatility relative to the sell-off in 2013.”
“With the Fed likely to keep the short-end of the US yield curve firmly entrenched at its current low level, we think that most Asian currencies have scope for small gains in coming months, having already regained some ground in recent weeks, following the February-March sell-off.”
“Downside risks to our currency forecasts include much higher US inflation pressure than we expect, prompting a faster-than-anticipated rise in US yields and a strong broad-based US dollar appreciation trend.”
Read: Bearish bets on Indian rupee rise to one-year highs amid covid resurgence – Reuters poll
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
