Asian Cur­ren­cies Ral­ly­ing at Peak, Sell Them Be­fore It’s Late: Gold­man

Cur­ren­cies in Asia are see­ing their best rally in more than 7 years, but fur­ther eas­ing in China & Ja­pan could push yuan & yen to their weak­est since 2008 Gold­man pre­dicts a 14% plunge in yen in next one year and a 7.4% drop in yuan

The Economic Times - - Commodities Plus -

Justina Lee

It’s time to sell Asian cur­ren­cies af­ter their best monthly rally in more than seven years, ac­cord­ing to Gold­man Sachs.

The cur­ren­cies will re­sume de­clines as fur­ther eas­ing in China and Ja­pan is likely to push the yuan and yen to their weak­est lev­els since at least 2008, says Ka­mak­shya Trivedi, a strate­gist at the bank who cor­rectly pre­dicted in Novem­ber that emerg­ing mar­kets would re­cover in 2016. South Korea’s won led the March rally with an 8.2% ad­vance and Malaysia’s ring­git’s 7.8% jump was its big­gest since 1998. A gauge of 10 Asian cur­ren­cies ex­clud­ing the yen rose 3%.

“These are good lev­els to short Asian cur­ren­cies, es­pe­cially the won, baht, Tai­wan dol­lar, yuan and ring­git,” said Trivedi, Gold­man’s chief emerg­ing-mar­ket macro strate­gist in Lon­don. “There are very di­rect im­pli­ca­tions for

emerg­ing-mar­ket cur­ren­cies in Asia from yuan moves. We forecast more weak­ness across this cur­rency com­plex.”

De­vel­op­ing-na­tion ex­change rates com­pleted their strong­est month since at least1999 as com­modi­ties re­bounded and the dol­lar slumped. Gold­man pre­dicts a 14% plunge in the yen to 130 per dol­lar in the next12 months, a level last seen in 2002, and a 7.4% drop in the yuan to 7 ver­sus the green­back, which would be the weak­est since May 2008. The won will de­cline al­most 12% from cur­rent lev­els to 1,300 in the pe­riod.—Bloomberg

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.