Strong bets on the weakness of Asian currencies ... and the yuan is the biggest threat

Asian currency fluctuations are likely to remain high as a result of the shock of customs duties imposed by US President Donald Trump, as well as the Chinese Yuan movements. Value fluctuations in the entire region have seen a remarkable increase since the announcement of the past week of new US customs duties that have exceeded expectations, while foreign exchange options signs indicate an increased orientation in respect of sale. Fear of economic growth has also led to the growing bets on reducing central banks in the region for interest rates. The uncertainty could remain high, even after Trump commented on most economies on Wednesday, except for China. A definite response and a prospective reduction to the Yuan with Beijing’s warning of a ‘decisive’ reaction, investors will await any indications of the possibility of reducing the value of the yuan, a step that can make Chinese exports cheaper, but the escape of capital can threaten. The price of the reference Yuan, who has ordered traders in the market, exceeded the critical level of 7.20 against the dollar on Tuesday. “The yuan is a reference for the emerging market currencies in Asia, and there is no doubt that we will see the widespread sales pressure in the markets here if China reduces the value of the yuan.” He added: “It can increase a vintage of a decline in Asian currencies and increase the severity of fluctuations in the markets.” The indicators of the tacit volatility have increased for a month for emerging market currencies in Asia since the announcement of US Customs, and the Yuan, color, rupees and the Taiwanese dollar have recorded the largest movements. It is more likely that fluctuations remain high amid investors’ evaluation of the possibility of the United States negotiation period and Asian governments, the risk of the greater reduction of the value of the Yuan and the US interest rate path. Options contracts for Asian currencies jumped against the US dollar for a month during April, suggesting that the hedging bonus or speculation is in Southeast Asian currencies during this period, in the light of the investor who changes their centers in preparation for losses. The yuan options show clear pessimistic indicators, as the dollar difference against the outer yuan has jumped to the highest levels this week. Currencies are influenced by the weak Yuan from the Southeast Asian currencies, it seems that the Singaporese dollar and Thai are the most vulnerable to the vulnerability of the Chinese Yuan in the local market. This estimate is based on a weekly data analysis over a five -year period, showing that these two currencies are closely related to the local yuan. Omar Selim, the joint head of Asia’s fixed income at Pinebridge Investments, said in an interview on Tuesday that we could see a reduction in the value of the Yuan by 5% -10% during the current year, adding that the weak Yuan can undertake the Singapore and South Korea, as China is a major commercial partner Singapore and South Korea. On the other hand, the currencies of economics that focus more on the local market, such as Bizo and Rupee, are less likely to reduce the value of the yuan. The Asian interest rate expectations bet on the direction of central banks in the region for more facilitation in monetary policy in light of the expectations that customs duties affect trade and growth in the region. Thai mobilization contracts of the blade show a cash facilitation of 59 basis points during the next six months, an increase of 7 basis points compared to the use of US customs duties. Similar bets also appear to lower interest rates in both Malaysia and the Philippines. The Philippine Central Bank reduced interest rates by 25 basis points, in accordance with the expectations of the majority of economists questioned by a “Bloomberg” poll.