HSBC Global Viewpoint Under the Banyan Tree - Asian FX and the strong USD
Nov 28, 2024
Joey Chew, Head of Asian FX Research at HSBC in Singapore, dives into the intricate world of Asian currencies impacted by a strong U.S. dollar. He discusses significant declines in 2023 and the future stability of currencies by 2025. The conversation highlights how U.S. economic data and local policies shape Asian FX dynamics, along with the pivotal roles of the Chinese renminbi and the Japanese yen. Chew emphasizes the interconnectedness of these currencies and the need for strategists to remain vigilant amid market volatility.
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Dollar Strength in Perspective
- The US dollar has strengthened against most Asian currencies in 2024.
- However, the Euro and other currencies outside the region have experienced more significant weakening against the dollar.
Drivers of Dollar Strength
- The expectation of a stronger dollar under a Trump presidency is linked to several factors.
- These include sticky inflation, potential interest rate hikes, and anticipated trade restrictions.
Tariff Impact on Currencies
- Tariffs imposed on exporting countries usually weaken their currencies against the dollar.
- However, the lack of concrete details on future tariff policies has led to muted reactions.