December 22, 2009
Won, rupee to lead emerging currencies in 2010
HONG KONG -- The South Korean won and the Indian rupee are set to outperform other emerging Asian currencies next year on views their central banks will start raising rates sooner than their regional peers, a Reuters poll shows.
The won will likely be the top performer, rallying 11% against the dollar between now and the end of next year, followed by the rupee with a 6% gain, the poll shows.
In contrast, the Thai baht is expected to be the worst performing currency in the region but it is still expected to rise 3%.
"We are very bullish on Asian currencies given strong fundamentals. The balance sheet overall in the region is in better shape than countries in the G7 or G10," said Chintan Gandhi, a currency strategist at Citigroup in Singapore.
"We do like the won. If you look at valuations, it’s one of the cheapest."
The Reserve Bank of Australia is the only major central bank in the Asia-Pacific region to have lifted rates since the global crisis. Analysts expect India’s central bank to tighten policy as early as next month and South Korea in February or March.
Citigroup forecasts economic growth of 7.8% for emerging Asia in 2010, up from an estimated 5.1% this year.
Market expectations that China will resume appreciation of the yuan after a hiatus during the global financial crisis, will add upward pressure on Asian currencies and reduce the need for intervention to curb currency strength.
"The decision in Beijing will be pivotal for the region," said David Cohen, Asian economist at Action Economics in Singapore. "None of the other Asian economies want to lose competitiveness to China."
Except the yuan, all other emerging Asian currencies have gained so far this year, prompting intervention from authorities worried a fledgling recovery in their exports could be derailed by high exchange rates.
Won, rupee to lead emerging currencies in 2010
HONG KONG -- The South Korean won and the Indian rupee are set to outperform other emerging Asian currencies next year on views their central banks will start raising rates sooner than their regional peers, a Reuters poll shows.
The won will likely be the top performer, rallying 11% against the dollar between now and the end of next year, followed by the rupee with a 6% gain, the poll shows.
In contrast, the Thai baht is expected to be the worst performing currency in the region but it is still expected to rise 3%.
"We are very bullish on Asian currencies given strong fundamentals. The balance sheet overall in the region is in better shape than countries in the G7 or G10," said Chintan Gandhi, a currency strategist at Citigroup in Singapore.
"We do like the won. If you look at valuations, it’s one of the cheapest."
The Reserve Bank of Australia is the only major central bank in the Asia-Pacific region to have lifted rates since the global crisis. Analysts expect India’s central bank to tighten policy as early as next month and South Korea in February or March.
Citigroup forecasts economic growth of 7.8% for emerging Asia in 2010, up from an estimated 5.1% this year.
Market expectations that China will resume appreciation of the yuan after a hiatus during the global financial crisis, will add upward pressure on Asian currencies and reduce the need for intervention to curb currency strength.
"The decision in Beijing will be pivotal for the region," said David Cohen, Asian economist at Action Economics in Singapore. "None of the other Asian economies want to lose competitiveness to China."
Except the yuan, all other emerging Asian currencies have gained so far this year, prompting intervention from authorities worried a fledgling recovery in their exports could be derailed by high exchange rates.
