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Asia FX Outlook: Not the best of times

Published date: 13 Jun 2012 | Read full report | Disclaimer
Emerging Markets

Annika LindbladAsian currencies have largely weakened in May on deteriorating global confidence after an optimistic start to the year and a calmer spring. The main risks we highlighted during the spring to the Asian currencies, i.e. weaker risk sentiment on especially weak data from China and an escalation of the European debt crisis, largely seem to have materialised.

The failed first attempt at elections in Greece soured the mood throughout the global markets, and the retreat in commodity prices has weighed on commodity currencies. Chinese data disappointed across the board especially in April, which weighed on global markets as well. The mood in the markets will remain uncertain at least up until the Greek elections on Sunday (June 17) – the outcome of which will largely determine the market mood over the summer.

In addition to the usual ”risk” currencies, also the CNY saw a significant weakening in May, as the authorities have started to prefer more two-way-flexibility. In India, on the other hand, the weak global risk sentiment only exacerbated the already worrying situation at home.
 
 Read more about these and other Asian currencies in the Asia FX Outlook below.

Annika Lindblad

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