APAC commodity currencies lead the way amid Russia-Ukraine war
Russia’s full-scale invasion of Ukraine was not priced in by markets and has led to spiralling commodity prices, higher risk premia, and strong demand for the USD. Asian foreign exchange (FX) markets have felt the combined impact of these developments.
What you will learn from this report:
- Currencies of large Asian commodity exporters (AUD, NZD, MYR) have substantially outperformed those of importers (INR, KRW, THB). We see these trends spilling over into Q2.
- Once market volatility subsides and the gentle weakening of the USD resumes, we expect the divergence to narrow and for most currencies to end the year stronger.
- One exception is the CNY, where we project a modest depreciation in H2 this year given China’s policy divergence with the US and other countries as the authorities stick to accommodative macroeconomic policies to bolster growth.
In the teeth of a real estate price correction as debt costs rise
Global commercial property prices were barely affected by the pandemic despite the fall in output and changes in the structure of the economy, such as the heightened demand for goods over services and increased home working. But higher interest rates in the wake of the pandemic are changing this picture and bringing a belated impact back to commercial property markets. High debt costs suggest a pricing correction is needed, with US industrial real estate to move 13% lower and European office properties 12.5% lower according to our estimates, based on the best buildings in gateway markets.Find Out More
China: A lopsided recovery to further deepen Covid scarring
We have cut our China growth forecast to 3.2% in 2022, from 4% previously, reflecting dismal Q2 growth and the absence of new stimulus. The bigger issue, however, is China’s dynamic zero-Covid policy, which, as long as it persists, seems likely to crimp private-sector growth.Find Out More