See decoupling of Asian currencies from $: Tyche Group

Asian markets were trading higher. China's Shanghai Composite surged 0.78% or 22.52 points at 2,927.53. Japan's Nikkei advanced 0.43% or 59.43 points at 13,889.35. Hong Kong's Hang Seng rose 0.71% or 160.72 points at 22,795.88. Taiwan's Taiwan Weighted gained 0.31% or 24.29 points at 7,879.35. Singapore's Straits Times was up 0.62% or 18.50 pointsat 3,005.12. South Korea's Seoul Composite shot up 0.85% or 14.53 points at 1,732.32.

Martin Hennecke, Senior Manager, Tyche Group feels that it could be the beginning of a decoupling of the Asian currencies from the US dollar because one can see Asia interest rate rising because they are trying to curb inflation. He believes that the United States cannot afford to raise interest rates because their economy is going down very sharply. So, what one could see decoupling of the Asian markets ultimately from the United States.

Hennecke hopes that this is going to happen going forward as one remained positioned in Asia and especially now in China for the recent sell off, while there is no position in the United States. But definitely what one can say is that Federal Reserve is trapped, Hennecke added. "They actually have to fight inflation because it is getting out of control, rising rates but the kind of have to rise rates because the economy is sinking. "

Excerpts from CNBC-TV18's exclusive interview with Martin Hennecke:

Q: Do you think it’s a temporary sort of relief rally that we are witnessing across Asia because while the Fed’s move or rather Fed’s stance may be that there are lowered risk to the US growth now that may not be the real case?

A: It is very tough to say what this actually marks but it could be the beginning of a decoupling of the Asian currencies from the US dollar because you are seeing Asia interest rate rising because they are trying to curb inflation. But on the other hand the United States cannot afford to rise interest rates because their economy is going down very sharply. So, what you could see is decoupling of the Asian markets ultimately from the United States. And we hope that this is going to happen going forward as we remained positioned in Asia and especially now in China for the recent sell off, while we don’t have positions in the United States. But definitely what one can say is that Federal Reserve is trapped they actually have to fight inflation because it is getting out of control, rising rates but the kind of have to rise rates because the economy is sinking.

So they are trapped - they can do nothing about it we think that the United States economy will get much worse but Asia looks reasonable buy and as the they have been saying over the last 6 years precious metals in particular are great as a class to have both the inflation risk and also interest rates should rise and that would also bring precious metals up very likely because there would be deflation or a depression.

Q: Your call on India because inflation is at its all time high that of about 11%, we have just seen the Reserve Bank of India that’s the Central Bank come up and hike interest rates, is your rating for India changed a lot?

A: I would say that there is weakness year to date in the Indian market, I think it's an opportunity to look at stock picking in India because if you look at India and if you hold large amount of cash with this rising inflation is not particularly smart. But on the other hand we will also still be very cautious on that because interest rates could get rise quite a bit further. So one should try to stay away from any type of leverage including mortgages also try to look out for companies that are not very leveraged that they are listed but generally I would use the market weakness to add position.

Q: Do you expect the effect of the Fed’s announcement to taper off quickly or stay prolonged for a bit more than the early announcements?

A: As I mentioned it could actually mark the start of a general decoupling and for example some markets in Asia have dropped very sharply even though the economy is doing very and China being the biggest one that is upwards will be the worst by the last week from 9.4% to 9.8% in the Chinese economy. So the economy fundamentals are sound and hopefully markets are going to follow the economy.