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jon46
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fyi...As reported by Barrons

 

 

 

March 16, 2015, 1:39 A.M. ET

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Which Asian Currencies Will Be Vulnerable As Dollar Gets Stronger?

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By Shuli Ren

 

Last week, the U.S. dollar index, which benchmarks against a basket of major currencies, hit a milestone of 100, the highest level since 2000. The U.S. economy is stronger, but the Federal Reserve Bank is also set to tighten rates this year, while the rest of the world is walking the other way. The dollar has already gained over 10% this year.

 

Without question, emerging Asia’s currencies have weakened. We’ve had six central banks easing policies this year, and at least half of them surprised the markets with their timing, if not the direction. I am counting India, Indonesia, Australia, Thailand and Korea. Singapore loosened its pseudo-peg against the dollar too.

 

But compared to the Euro or emerging markets outside Asia, emerging Asian currencies have not done that badly. The Malaysian ringgit and the Indonesian rupiah are the worst performer so far, down 5.4% and 6.5% respectively. By comparison, the Brazilian real has slumped 22.7% and the Colombian peso has retreated 12.3%.

 

It could be a show of Asia’s strength, or that the worst has not come yet.

 

Deutsche Bank‘s strategist Sameer Goel is worried about the latter possibility, because Asia’s central banks are not done with their easing cycles yet.

 

As such, which currencies are the most vulnerable?

 

According to Goel, the Singapore dollar is vulnerable because of its high-beta semi-peg status, the Taiwan dollar too because it is a proxy to China play. The Malaysian ringgit and the Thai baht are weak because of poor domestic economy. Deutsche said it would not bet against the Indian rupee because of the strong growth story there.

 

Deutsche forecasts the Taiwan dollar to weaken to 33.5 per dollar. It is now trading at 31.64. Thai baht will break out the key 33 level to 35. It is now trading at 32.86.

 

Month-to-date, the iShares MSCI Singapore ETF (EWS) retreated 6.2%, the iShares MSCI Thailand Capped ETF (THD) gained 1.1%, the iShares MSCI Taiwan ETF (EWT) rose 3.4%, the iShares MSCI Indonesia ETF (EIDO) dropped 3.9%, and the iShares MSCI Malaysia ETF (EWM) fell 5%.

 

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It boggles me why any one would want their home currancy to be strong, UNLESS they are living overseas.

 

For anyone at home, it's far better to have a weak currancy, improve exports, build your own internal businesses, rely less upon imports, if you need a Merc, you pay extra, so what, Manufactuiring, Tourism, Education, Health, all export industries that benefit from weak currancy,

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It boggles me why any one would want their home currancy to be strong, UNLESS they are living overseas.

 

For anyone at home, it's far better to have a weak currancy, improve exports, build your own internal businesses, rely less upon imports, if you need a Merc, you pay extra, so what, Manufactuiring, Tourism, Education, Health, all export industries that benefit from weak currancy,

 

 

but for the US Dollar, when the manufacturing is done overseas...does not help the US economy, it hurts it!

 

TSA is doing its best to kill the tourist industry!

 

education, what is the USA, #35 in the world of education? no help and the dollar has been week for some Years now!

 

health, a weak dollar is no help with the lack of affordable insurance!

 

People tried to spin that a weak dollar would help exports, not so. There has been no trickle down effect, unemployment is still

way high and underemployment even higher.

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The USA is a "service economy" as the "experts" call it...meaning we manufacture very little...we buy huge amounts from countries like China.

 

We export beef...buuuuut, like Japan stopped importing US beef due to issues with the quality.

 

Look at the housing market in the USA, hardly building any new houses; look at the roads and bridges, falling apart and the wonderful government will send billions of $$$ to Iraq and Afghanistan but would put a dollar toward the infrastructure...and on, and on it goes.

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The US dollar is at or near its high against the euro with the Euro to the $ around $1.04-$1.06 range. Because the US $ has

appreciated against most currencies, real estate prices in Europe are now less expensive than a year or two years ago.

 

Unemployment rate in the US is down to 5.5%. The US stock market is doing very well.

 

I believe the US dollar will remain strong as long as crude oil prices remain at today's prices...about 50% less than a year ago.

 

Yes, I wish the Thai baht to be 40 to the $ on my return visit to Thailand next year.

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