Asean FX in focus as analysts consider global monetary policy changes
ASEAN currencies – including the Indonesian rupiah – would still be sensitive to the United States. Photo: iStock
As central banks begin to shift into tightening mode, attention in Asia is turning to currency performance. One of the areas of interest is the 10 states that make up the Association of Southeast Asian Nations (ASEAN).
The fact that nearly half of ASEAN’s currencies – the Lao kip, Vietnamese dong, Cambodian riel, Myanmar kyat – are not freely tradable means that regional analysis tends to focus on the rupee (IDR), Malaysian ringgit (MYR), Philippine peso (PHP), Singapore dollar (SGD) and Thai baht (THB).
Chong Wee Khoon, BNY Mellon Markets
The obvious factor influencing the IDR, MYR, PHP, SGD, and THB – commonly referred to as Asean-5 – is the Federal Reserve’s strategy. As BNY Mellon Markets Senior Market Strategist for Apac Chong Wee Khoon notes, US policy tightening and the overall withdrawal of liquidity in the financial system are likely to put negative pressure on emerging markets.
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