Friday 29 Mar 2024
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KUALA LUMPUR (Jan 23): Based on historical trends, Asian currencies are likely to weaken against the U.S. dollar in the first 100 days after U.S. President Donald Trump’s inauguration, HSBC Global Research said.

Currencies with less robust external fundamentals like the ringgit, the rupee and the rupiah have tended to underperform the most, the research house said in an Asian foreign exchange (FX) report today.

However, Asian currencies should strengthen during the second half of the year, with stronger capital flows expected to return to Asian economies during the second quarter.

“We ultimately believe that Trump will not be able to live up to expectations and only deliver watered-down versions of his policy proposals,” the research house said.

Among a basket of nine Asian currencies, the ringgit has historically been the worst performer, depreciating as much as 1.4% in the month, following U.S. presidents’ inauguration speeches, according to data from Bloomberg and HSBC.

“Interestingly, the extent of Asian currencies weakness during this period has also coincided strongly with the number of times the incoming president has focused on the economy during their inauguration speech,” the report said.

What was more concerning for Asian currencies was the protectionist tones Trump portrayed, HSBC said. It added volatility in these currencies would arise, if Trump’s rhetoric towards China continues to intensify. 

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