Asia: FX forecasts downgraded on trade escalation – ANZ
|ANZ analysts are downgrading their Asian currency forecasts, and are now expecting further depreciation into year-end and continuing into 2020.
Key Quotes
“The escalation in trade tensions between the US and China in recent weeks plays a large part in our forecast revisions.”
“We expect the Chinese authorities to allow the yuan to be more flexible in responding to the latest US tariff increases. This will have some spill-over effects into other Asian currencies.”
“THB is likely to be an outperformer on safe haven demand. VND is also likely to stay resilient given that Vietnam will benefit from trade diversion and the relocation of manufacturing production.”
“The risk is that the ongoing escalation will result in a much deeper growth slowdown in Asia, and more depreciation pressure than what we have factored in.”
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