Mecklai graph of the day: Asian currencies: Bear or Bull?

Mecklai graph of the day: Asian currencies: Bear or Bull?

At the beginning of last fiscal year, the rupee depreciated on the heels of worst current account deficit in a quarter on record for India and anaemic growth numbers. Other Asian currencies were sailing in the same boat against the backdrop of euro crisis as dollar continued to surge higher. In the second half of last year, major central banks took the pledge in a bid to pull their economies out of recession by easing monetary policy. Thus Asian economies have witnessed inflows from the advanced economies and indeed their currencies started appreciating.

South Korean (KRW) won has been the worst performing currency this year so far on the back of ongoing yen weakness and the possibility of a rate cut spooking the markets. The Bank of Korea signaled its concern that economic growth is slowing and will need to take easing steps. The Thai baht (THB) has been the best performing emerging Asian currencies so far this year with a gain of about 2.5 percent against the dollar on sustained capital inflows (equity shares peaking at 19 years high )and foreign direct investments. The loss of momentum in Asian currencies can be attributed to Yen and Dollar with former weakening sharply due to monetary easing while later overall strength was observed due to improvement in US economy and fallout in European economies. Now with recent news of Cyprus bailout precipitates, dollar thrust is inevitable, dragging down further in Asian currencies.

Below graph shows movement of Asian Currencies since Jan 2013

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