FXStreet (Guatemala) - Analysts at Bank of America Merrill Lynch noted that the Asian currencies have been relatively resilient to the steady appreciation of the USD versus the majors.

Key Quotes

"Asian currencies have been relatively resilient to the steady appreciation of the USD versus the majors (particularly the EUR) as well as the weakness in broader EM currencies since the beginning of 3Q. Indeed, the correlations of the Merrill Lynch Asia-ex-Japan FX Index (MLFXAXES) to both the DXY Dollar Index and the MLFXGEMS (GEMs FX) Index are at the low end of the post-2008 crisis range (Chart of the Day). In our view, this apparent decoupling of Asian FX from global currency moves can be explained by two distinct factors:"

"Idiosyncratic fundamentals: Strong domestic themes in Asia, particularly policy intervention (China and Korea) and elections (India and Indonesia) have become more dominant drivers of Asian currencies."

"Low US yields: US dollar strength has not been accompanied by higher US yields, limiting the spillover to portfolio flows to Asia that are typically sensitive to higher USD funding costs."

Related Articles
  1. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  2. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  3. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  4. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  5. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  6. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  7. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
  8. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  9. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  10. Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!