At Any Rate
Global FX: Late-week shocker jolts FX
May 2, 2025
In this engaging discussion, Arindam Sandilya, co-head of FX strategy in Singapore, dives into the surprising decline of the USD against the Taiwanese dollar and its ripple effects on Asian currencies. He analyzes shifts in the Chinese Yuan's role in global markets and how recent tariff changes impact the US dollar among G10 currencies. Sandilya also shares insights on central bank policies, specifically the European Central Bank and Bank of England, and their implications for currency valuation. A must-listen for FX enthusiasts!
19:58
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Quick takeaways
- The abrupt 6% drop in the Taiwanese dollar underscores an unusual rise in volatility, driven by domestic and foreign capital flows.
- Developments in U.S.-China trade negotiations may significantly influence the Chinese Yuan's performance against other Asian currencies and the dollar.
Deep dives
Historic Movements in Asian FX
The Asian foreign exchange market experienced significant volatility, especially with the Taiwanese dollar dropping 6% within a single day. This sudden movement is notable considering the long-term average volatility in this region has typically been around 6% annually. The fluctuating currency values have largely been attributed to domestic and foreign capital flows, where local investors appeared to be taking positions abroad, impacting local currency strength. The unusual nature of these high volatility levels is creating speculation around possible informal currency accords among region's central banks, although such claims remain unconfirmed.
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