Wednesday, June 19, 2013

Asia Currency Sell-Off Goes From Bad to Ugly

by Rajeshni Naidu-Ghelani

Asian currencies have been battered lately by talk of the U.S. Federal tapering its massive stimulus program and analysts expect the pummeling to continue as other major drivers that led the currencies to appreciate now face pressure.
On top of funds flowing out of Asia on worries about the Fed unwinding its asset-purchase program, Citi Research expects sovereign risk re-assessment, weakness in the Japanese yen, and deteriorating current-account deficits to weaken regional currencies further in the months ahead.
“We think there is more weakness to come for most currencies as some of the major drivers of Asia FX (forex) appreciation since the global financial crisis are less supportive,” Johanna Chua, chief Asia economist at Citi said in a report.
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