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“These relative value trades are a quicker way to express a relative macro view within Asia and how that can impact Asian currencies, than just a specific dollar-centric view,” said Paul Mackel, head of currency strategy at HSBC in Hong Kong. Morgan Stanley’s Asia analysts recommend likewise.Īnalysts at HSBC reckon north Asian currencies such as Korean won and China’s yuan could outperform the South Asians, but they also like relative value trades that play off the rupee or won against the Thai baht or Indonesian rupiah. The rupee’s rally against the Singapore dollar, Thai baht and even the Indonesian rupiah, which along with the rupee was severely hit during last year’s volatile selloff of emerging markets, is evidence of investors cherry-picking.īeing long the rupee against other Asian currencies is a top trade for analysts at Citi. The consensus thus favours trades that limit exposure to the dollar and exploit intra-regional divergences. There is far greater consensus this year than in 2013, when the main drivers of currencies were concerns over when the Federal Reserve will begin tapering its easy policy and how much of money will leave emerging markets.Īnalysts and traders alike concur that the Fed’s gradual policy tightening will strengthen the dollar, while causing sporadic volatility, and that country-specific factors will become market drivers. 100 Yuan notes are seen in this illustration picture in Beijing November 5, 2013.
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