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Forex: Asian Currencies Expand Their Potential

Posted on 7. August 2020 in Allgemein


Asian currencies are expanding their potential in the Forex market. After months where these assets were not the first choice of investors, they have regained strength.

World economies have been shaken by the global Coronavirus crisis, causing an unprecedented recession.

Thus, the foreign exchange market has been equally affected, as investors opted for safer currencies for their operations. And Asian currencies did not provide that security, but that seems to be changing.

Investors are raising their stakes on Asian currencies

China and Asia in general have promised that the recovery of their Bitcoin Millionaire economies will be a near reality. Well, the Asian giant has managed to make the figures for its country’s economy positive.

Analysts‘ expectations of this supposed recovery of the Asian economies were negative at first. Since the Coronavirus seemed to have caused too much havoc in those countries.

However, the clear reopening of the Chinese economy has allowed investors to regain risk appetite. And thus incline their trading to Asian currencies.

Investors have become more interested in the risk environment. Focusing on the Chinese yuan and most other Asian currencies, according to a Reuters survey.

This is thanks to signs of a recovery in the pace of Asian economies. Since the figures that have come out of the economic data, they promote positive growth.

In addition, initial data from three potential human trials of COVID-19 vaccine were released on Tuesday. This has been an optimistic indicator for China, hailing the interest of investors in Forex, said Han Tan, FXTM market analyst.

However, he warned that the tolerance of export-dependent Asian countries for greater monetary strength is limited.

In addition, political tensions between China and the U.S. appear to be increasing by the day. Complicating the environment for Asian currencies

Forex Market: Investors regain risk appetite
Will China achieve the desired economic upturn?
China recorded better than expected figures in the country’s economy in the Gross Domestic Product (GDP) and trade figures. In addition, the Chinese government promised increased fiscal support.

This increased confidence in the yuan and fueled a recovery in local stocks.

Goldman Sachs analysts expect renewed interest sentiment between the yuan and the dollar to support currency operations. They believe that the growth of Chinese activity will overshadow the rest of the world in the second half of 2020.

However, they point to worsening Sino-US relations as a potential threat to the Asian giant’s economic rebound.


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Asian Currency Survey Results
The Reuters survey focuses on analysts‘ considerations.

These are the current market positions in nine Asian emerging market currencies: the Chinese yuan, the South Korean won, the Singapore dollar, the Indonesian rupiah, the Taiwan dollar, the Indian rupee, the Philippine peso, the Malaysian ringgit and the Thai baht.

The yuan’s bullish positions outpaced those of its peers and were at their highest point in two and a half years. Thus touching levels that were only seen before the U.S.-China trade war began.

In summary, these data show a clear improvement in the performance of Asian currencies in the Forex market.

Thus, analysts believe that this outlook can be sustained for a couple more weeks. The political tensions with the United States from China could complicate the future operations of the Yuan.