On Friday, the major US currency was still steady, and the British pound dived a bit…
Experts: in real terms Asian currencies are still affordable
Asian currencies happen to be cheap enough in historical trade-weighted terms notwithstanding a firm soar to multi-year maximums for the last year on a weakening greenback as well as sturdy flows into this region, as market experts state.
For example, Malaysia's ringgit has managed to gain +15% versus the evergreen buck since the beginning of the previous year, although in real effective exchange rate terms it remains 5% below its ten-year average.
Meanwhile, the Japanese yen, Indonesian rupiah as well as Philippine peso are heading south, diving below their ten-year averages.
The ascend in regional currencies versus their trading partners' assets for the last year has appeared to be much lower than their revenues on the greenback, making them still attractive, as market experts point out.
The Thai baht and also the South Korean won have tacked on more than 12% each versus the evergreen buck since Jan 2017, although their REER rates jumped nearly 4% during that period.
Apparently, currencies in the Asian region could still have enough room to inch up, especially considering the extremely impressive current account surpluses in their domestic economies.
As a matter of fact South Korean won's and China's yuan REER rates happen to be the highest in their region, showing 110.7 and 122.6 respectively.
Asian exports have mostly managed to absorb the ascend in regional currencies, simultaneously deriving benefits from sturdy global demand as well as a revival in commodity prices.
In 2017, China's exports rallied for the first time for three years. Meanwhile, Japan's exports enjoyed their most impressive surge for seven years.
Notwithstanding the baht edging up approximately 10% versus the evergreen buck, Thai exports rallied 9.9% in 2017, which is the greatest soar for six years.
In general exports are prone to reacting external demand conditions, rather than fluctuations in currencies, as some financial experts explained.
On Friday, the Japanese yen drifted away from a two-week maximum versus the evergreen buck after North Korea told that it was still open for negotiations with the United States…
On Wednesday, the euro and British pound approached their five month-lows after the disappointing economic reports…
America’s on the verge of starting an investigation into whether thermoplastic components utilized in some Japanese as well as German vehicles sold in the country violate its patent laws or not…
On Monday, gold headed south in European trade, making its way toward a three-week minimum after American congressional leaders came to an agreement to fund the government via the fall, thus easing worries as for a shutdown of the federal government…
On Tuesday, crude prices traded weaker because a poll on Chinese manufacturing came in weaker than expected and market participants looked ahead to American inventories on oil as well as refined products to set the overall tone…