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Asian currencies riding high on false rally - ANZ

FXStreet (Delhi) – Khoon Goh, Research Analyst at ANZ Research, suggests that while a delay in Fed rate hike expectations may have been the catalyst for the sharp rally in Asian currencies this week, we do not believe this is the start of a turnaround.

Key Quotes

“The moves largely reflected market positioning, exacerbated by a lack of liquidity in some markets.”

“We still see challenging times ahead for Asian currencies as slowing growth; deleveraging and prospects for further policy easing ultimately see depreciation pressure return.”

“Therefore, we recommend initiating long positions in USD/KRW and USD/TWD, as we see these two currencies as most vulnerable – particularly to a slowdown in China.”

“We also recommend going long PHP against SGD ahead of the MAS meeting, were we expect a re-centring of the policy band to the prevailing S$NEER level.”

China: Under pressure on dipping Forex reserves – Rabobank

Michael Every, Research Analyst at Rabobank, notes that while Chinese FX reserves plummeted USD94bn in August, and as much as USD112bn adjusting for exchange-rate effects, in September the FX decline slowed to USD43bn, seeing total reserves slip to USD3,514bn, and so taken as a positive development by the market but that number still looks worrying.
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