SINGAPORE: Malaysia’s ringgit and China’s yuan are emerging as Asia’s most-promising currencies for fund managers as they look for the best place to put their money in the new year.
A rebound in exports, widening current-account surpluses for some nations and an ongoing global chase for yields are fueling optimism that regional currencies will extend their rally into 2018.
A gauge of Asian currencies is up 5.5 percent this year, set for its best performance since 1998.
South Korea’s won is leading spot gains, while the ringgit tops in terms of total returns.
“We expect the Asian economies to do well as the global recovery broadens out,” said Wilfred Wee, a Singapore-based fund manager at Investec Asset Management Ltd., which oversees $132 billion globally.
“We can expect Asian currency strength to sustain into 2018.”
But there are risks too. While the Federal Reserve this week maintained its projections for three interest-rate increases in 2018, a more hawkish tilt could spoil the party for Asian exchange rates.
A surprise jump in global inflation or a war on the Korean peninsula are other spoilers, say investors, who also favor Indonesia’s rupiah and the Indian rupee, while being less optimistic about Thailand’s baht and the won.
Malaysian ringgit
This year has marked a turnaround for the ringgit, which has rebounded from a 19-year low on the back of surging oil prices and bets the central bank will tighten policy.
With prospects for better exports and economic growth, the currency has delivered a total return of more than 13 percent.
* Amundi Asset Management likes the ringgit due to Malaysia’s improved fundamentals, says Hakan Aksoy, senior portfolio manager for EM local currencies in London
* For Investec, the ringgit is attractive as it’s undervalued and under-owned, and the central bank has turned hawkish due to robust growth, says Wee
* Union Investment Privatfonds GmbH is more comfortable with the ringgit now than earlier because of higher crude prices, says Christian Wildmann, a Frankfurt-based senior portfolio manager
– NST
