AXJ vulnerability on valuation, policy and hedging flows
Standard Chartered notes... The broad-based revaluation of the USD in the global financial system has left some AXJ currencies losing ground against it but actually still appreciating in tradeweighted (TWI) terms. Based …
The broad-based revaluation of the USD in the global financial system has left some AXJ currencies losing ground against it but actually still appreciating in tradeweighted (TWI) terms.
Based on market pricing at the Asian close on Friday, seven of the 10 widely traded AXJ currencies had posted net TWI gains since June and December 2014.
Moreover, some of these TWI gains since June 2014 have been substantial, with the CNY, THB, HKD and Philippine peso (PHP) all posting TWI gains of around 10ppts or more.
However, recent, pronounced weakness in the MYR, SGD and IDR against the USD has also been reflected in losses for the currencies on a TWI basis, with the MYR as the outlier.
With USD-MYR at 3.69, the MYR TWI is 1.8% weaker than in December 2014 and 3.7% weaker thanlast June.
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