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DBS flags Asian currency repricing risk as policymakers resist depreciation

The bank points to US efforts to stabilize the Japanese yen and EU concerns about the Chinese yuan, arguing investors should watch for upside appreciation risks rather than continued weakness.

Reported · Written up by our desk · Central Banks

DBS Group Research economist Philip Wee says Asian currencies may face repricing risk as global policymakers increasingly resist competitive depreciation, shifting the risk balance away from further broad-based weakness.

Wee cites US support aimed at stabilizing the Japanese yen as a signal that policymakers may curb wider Asian currency selling, while also noting European Union concerns about the Chinese yuan being undervalued.

In the same view, Wee concludes that investors should pay more attention to potential Asian currency appreciation than to expectations for additional depreciation, as policy makers look to reduce the scope of currency-driven pressure.

The FXStreet commentary also notes that market moves in the region remain sensitive to signals from major policy centers, alongside ongoing attention to upcoming US labor data in the near term.

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