KUALA LUMPUR (Jan 3): Asia-based exporters are advised to partially hedge their upcoming US dollar proceeds, “no matter how unfavourable the current exchange rate is,” amid US dollar weakness, UOB Group said.

UOB head of markets strategy Heng Koon How and FX strategist Peter Chia wrote in a note today the pace at which the USD weakens has been faster than anticipated.

"For Asia-based exporters, this is a painful start for the year due to strong Asian currency strength. For Asia-based importers, they have the tailwind on their side and can afford to wait and see how low the US dollar trades before committing to their US dollar purchases.

"Three key negative drivers reinforce US dollar weakness as we start 2018. These are global monetary policy convergence as other central banks play catch-up with the Fed in terms of normalising policy, a US tax reform that is of little help to the US dollar and on-going flattening of the US yield curve," they said.