THE ringgit and China’s yuan are expected to be two of the region’s top currencies to look out for in 2018, according to a Bloomberg report.
Economists and fund managers are expecting a rebound across most regional currencies into 2018, with a gauge of Asian currencies to go up 5.5% this year, set for their best performance since 1998.
While South Korea’s won is leading spot gains, the ringgit tops in terms of total returns.
“We expect the Asian economies to do well as the global recovery broadens out,” Wilfred Wee, a Singapore-based fund manager at Investec Asset Management Ltd, which oversees US$132 billion globally told Bloomberg.
“We can expect Asian currency strength to sustain into 2018.”
This year has marked a turnaround for the ringgit, which has rebounded from a 19-year low on the back of surging oil prices and bets the central bank will tighten policy.
The currency has delivered a total return of more than 13%.
For Investec, the ringgit is attractive as it’s undervalued and under-owned, and the central bank has turned hawkish due to robust growth, said Wee.
The offshore yuan is set to halt three years of losses as exports rise and manufacturing activity firms up.
According to Investec, China’s offshore yuan is attractive due to nation’s prospects of inclusion in global bond indexes and rising yields.
Having risen more than 5%, the rupee is expected to experience its first annual advance since 2010 as Indian stocks and bonds have attracted global funds on the promise of economic reforms and political stability.
Once part of Morgan Stanley’s “fragile five,” the rupiah has rallied due to a combination of high yields and an improving economic outlook.
Buoyant agriculture prices are expected to add to tailwinds for the commodity-exporting nation, boosted by optimism around President Joko Widodo’s reforms.
South Korean won
South Korea’s won led Asian currencies with an 11% gain this year. But analysts expect the won to lose some ground heading into early 2018 with most of the positives, including higher domestic interest rates, seen as already being in the price.
With a 10% advance, the baht is the region’s second-best performer this year, thanks to Thailand’s current-account surplus, rising exports and bond inflows.