Research Briefing | Sep 27, 2021

APAC | Asia stronger today than in 2013 ahead of Fed taper

cover image of the report

Notwithstanding Covid-related risks, we expect Asian currencies will show resilience in the face of tighter US monetary policy, particularly when compared to the 2013 taper tantrum.

What you will learn from this report:

  • Most economies are less reliant on external financing of their debt and current account balances; plus, they have significant foreign reserves they can draw on in the event of tighter external funding.
  • Nonetheless, we expect those with current account deficits – the THB, PHP, IDR, and INR – to weaken in the short term against the USD.
  • However, we expect depreciation pressures to be limited, as we estimate that the IDR and THB are now “undervalued” by between 6% and 11%, with the others around “fair value”.
  • This should also help reduce the risk of large foreign outflows in case of a sharp rise in risk aversion.
Back to Resource Hub

Related Services

Post

UK: Sterling’s woes, Kwarteng’s vows, Bailey in the middle

The negative market reaction to last week's fiscal announcements appears to be a function of doubts over the credibility of the UK government's long-term fiscal plans. Though we think the structural position is not as bad as last Friday's drop in asset prices implies, it's clear the government will struggle to retain credibility if it fails to engage with market concerns.

Find Out More
Tokyo, Japan

Post

BoJ to look through a temporary decline in monetary base

The Bank of Japan (BoJ) left monetary policy unchanged at today's (22nd Sep) meeting, maintaining current short- and long-term interest rates, despite another wave of yen weakening and upward pressures on JGB yields. 

Find Out More