The research firm pointed to the lack of support by economic fundamentals, highlighting that shrinking global export orders suggest a forthcoming weakness in ASEAN exports, which would lead to a depreciation of these currencies against the US dollar.
According to BCA Research, the policy rate differential between ASEAN countries and the United States has not historically been a significant factor in the value of ASEAN currencies.
BCA predicts that during a global risk-off period, which is anticipated to occur, the Malaysian ringgit and the Thai baht will perform better than their emerging market counterparts. This outperformance is attributed to Malaysia and Thailand’s status as net creditor nations.
Conversely, BCA Research anticipates that the Philippine peso and the Indonesian rupiah will likely fare worse in comparison to their peers. The firm attributes this underperformance to the Philippines and Indonesia’s positions as large net debtor nations, which could be more vulnerable in times of economic uncertainty.
The report implies that the current upward movement in the value of ASEAN currencies is temporary and not in alignment with the fundamental economic indicators that typically drive currency strength.
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