Currencies in Asia fluctuate after Fed tightening

Bisnis.comJAKARTA currency Developing countries in Asia are forecast to continue the downtrend and sentiment risk off due to Fed tightening.

reported Bloomberg on Monday (6/27/2022) it was like Goldman Sachs Group Inc.

High-yielding currencies such as the Philippine peso, Indian rupee and Indonesian rupiah came under pressure in June as currency woes spread across emerging markets.

It was caused by the attitude hawkish by the Federal Reserve, which has given a signal to further raise its benchmark interest rate up to 75 basis points.

“In the coming weeks we expect counter-pressure dollar this will continue and in some cases pose a potential upside risk to our dollar exchange rate forecast,” Goldman Sachs strategists Zach Pandl and Danny Suwanaruti said in a statement.

The Indian rupee fell to its lowest level last week and the Philippine peso plunged to its weakest level in more than 16 years.

According to Goldman Sachs, these countries will experience exchange rate pressures against the US dollar and become increasingly vulnerable to rising oil prices and Fed tightening:

1. Indonesia

rupiah has been pressured by rate hikes and Fed sentiment risk off which is widespread. The dollar-rupiah could continue to face upward pressure until Bank Indonesia follows the Fed on rate hike.

2. Philippines

The peso fell about 5 percent among Asian emerging currencies in June.

The current account deficit is likely to widen to 3.2 percent this year from 1.7 percent in the previous year. These factors support the view bearish bank against currency.

3. India

The Indian rupee is believed to remain under pressure against the dollar amid a possible $40 billion balance of payments deficit this year.

That’s a far cry from a $55 billion surplus in 2021.

The rupee will tend to depreciate when faced with a balance of payments deficit. To that end, Goldman forecasts upward pressure U.S. dollarrupee will continue in the coming months.


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