Latest news with #Asian-crisis-in-reverse
Gulf Today
08-05-2025
- Business
- Gulf Today
Asian investors' trust in dollar faces problems
A wave of dollar selling in Asia is an ominous sign for the greenback as the world's export powerhouse starts to question a decades-long trend of investing its big trade surpluses in US assets. Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore, South Korea, Malaysia , China and Hong Kong. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling, according to Reuters. While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. 'To me, it has a very sort of Asian-crisis-in-reverse feel to it,' said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998, capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. 'Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into US Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long,' said Gavekal's Gave. Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by US President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into US assets in two places. First, exporters especially in China can expect fewer receipts as tariffs cut access to US customers. Second, fear of a US downturn casts a shadow over US asset returns. Some are speculating on what markets have termed a 'Mar-a-Lago agreement,' he said, or a deal – named after Trump's gilded Florida resort – to weaken the dollar. Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks – mostly dollars and largely held by exporters – were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in US stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its US Treasury holdings and diversifying currency exposure into non-US assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of US trade talks. Still, the market seems to be voting with its wallet.'USD/TWD is a canary in the coal mine,' said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. 'Asian demand for US dollars and Asian central bank desire to support the US dollar is waning.'
Yahoo
07-05-2025
- Business
- Yahoo
Your summer vacation in Asia could get a lot more expensive
Beach holidays in Asia could get more expensive as the dollar weakens against local currencies. Nathalie Jamois/SOPA Images/LightRocket/Getty Images Asian currencies are surging as the US dollar weakens, and it could impact summer travel costs. The dollar's decline is driven by the "Sell America" trend and trade negotiations. A weaker dollar may shift purchasing power to Asia, affecting investments and markets. Dreaming of a cocktail on the beach in Malaysia or exploring the buzzing night markets of Taiwan? You might want to hold that thought: Summer vacations in Asia may get more expensive than you think, as the US dollar continues to come under pressure. The typically stable Taiwan dollar surged by as much as 10% against the greenback in the first few days of this month. The currency is now about 8% higher against the dollar this year to date. Other Asian currencies, including those from Singapore, South Korea, Malaysia, China, and Hong Kong, have also rallied over the same period. The gains come as Asian companies, including insurers and exporters, move money out of US assets and back home — a shift driven in part by the weakening dollar. Many didn't hedge against currency swings, so they're now losing money as the greenback falls amid fears over Trump's tariffs and a slowing economy. Francesco Pesole, an ING strategist, wrote in a note on Tuesday that economies like Taiwan, which have large holdings in US-denominated assets, are feeling the pain from the dollar's slide. As a result, investors are increasingly looking to hedge their exposure and diversify away from US investments. Pesole said this trend is part of a "more worrying bearish narrative for the dollar" as it comes at a time when Asian countries are negotiating trade deals with the US. The US Dollar Index, which measures the greenback against a basket of major peer currencies, is down about 8% this year to date, as investors dig in on the "Sell America" theme, which has roiled the Treasury market. "We agree with the view expressed in the market that the extremely volatile markets seen in Taiwan FX over the last few days are a warning shot," George Saravelos, the global head of foreign exchange research at Deutsche Bank, wrote on Tuesday. 'Asian crisis in reverse' The unusual moves in Asia's currency markets could have major implications in the longer term. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," Louis-Vincent Gave, the founding partner of Gavekal Research, said in a podcast on Monday. The 1997 Asian Financial Crisis was triggered by the collapse of the Thai baht, which led to financial contagion across the region. In its aftermath, many Asian economies began hoarding US dollars to build up foreign exchange reserves as a defense against future crises.
Business Insider
07-05-2025
- Business
- Business Insider
Your summer vacation in Asia could get a lot more expensive
Asian currencies are surging as the US dollar weakens, and it could impact summer travel costs. The dollar's decline is driven by the "Sell America" trend and trade negotiations. A weaker dollar may shift purchasing power to Asia, affecting investments and markets. Dreaming of a cocktail on the beach in Malaysia or exploring the buzzing night markets of Taiwan? You might want to hold that thought: Summer vacations in Asia may get more expensive than you think, as the US dollar continues to come under pressure. The typically stable Taiwan dollar surged by as much as 10% against the greenback in the first few days of this month. The currency is now about 8% higher against the dollar this year to date. Other Asian currencies, including those from Singapore, South Korea, Malaysia, China, and Hong Kong, have also rallied over the same period. The gains come as Asian companies, including insurers and exporters, move money out of US assets and back home — a shift driven in part by the weakening dollar. Many didn't hedge against currency swings, so they're now losing money as the greenback falls amid fears over Trump's tariffs and a slowing economy. Francesco Pesole, an ING strategist, wrote in a note on Tuesday that economies like Taiwan, which have large holdings in US-denominated assets, are feeling the pain from the dollar's slide. As a result, investors are increasingly looking to hedge their exposure and diversify away from US investments. Pesole said this trend is part of a "more worrying bearish narrative for the dollar" as it comes at a time when Asian countries are negotiating trade deals with the US. The US Dollar Index, which measures the greenback against a basket of major peer currencies, is down about 8% this year to date, as investors dig in on the "Sell America" theme, which has roiled the Treasury market. "We agree with the view expressed in the market that the extremely volatile markets seen in Taiwan FX over the last few days are a warning shot," George Saravelos, the global head of foreign exchange research at Deutsche Bank, wrote on Tuesday. 'Asian crisis in reverse' The unusual moves in Asia's currency markets could have major implications in the longer term. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," Louis-Vincent Gave, the founding partner of Gavekal Research, said in a podcast on Monday. The 1997 Asian Financial Crisis was triggered by the collapse of the Thai baht, which led to financial contagion across the region. In its aftermath, many Asian economies began hoarding US dollars to build up foreign exchange reserves as a defense against future crises. "If the Asian crisis essentially meant a massive transfer of purchasing power from the Asian consumer to the US consumer, then the reverse Asian crisis that we are now going through essentially reverses all of these trends," he said. If the trend spreads across the region, there will be "massive investment implications," Gave said, citing a structurally weaker dollar and pressure for Treasurys. On the flip side, local stock markets in Asia could benefit. "I think it's a tremendous transfer of purchasing power from the West to the East," he said.
The Hindu
06-05-2025
- Business
- The Hindu
'Asian crisis in reverse' as currencies soar on the dollar
Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore, South Korea, Malaysia , China and Hong Kong. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling. While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998, capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. "Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into U.S. Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long," said Gavekal's Gave. Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by U.S. President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into U.S. assets in two places. First, exporters especially in China can expect fewer receipts as tariffs cut access to U.S. customers. Second, fear of a U.S. downturn casts a shadow over U.S. asset returns. "Trump's policies have weakened the market's confidence in the performance of U.S. dollar assets," said Gary Ng, senior economist at Natixis. Some are speculating on what markets have termed a "Mar-a-Lago agreement," he said, or a deal - named after Trump's gilded Florida resort - to weaken the dollar. Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. Talk becomes reality Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks - mostly dollars and largely held by exporters - were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in U.S. stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. There are signs the dollar view is shifting from all corners. Goldman Sachs said in a note on Tuesday that investor clients had recently flipped from short yuan positions, to long positions, or in other words, they are shorting the U.S. dollar expecting further weakness. Robin Xing, Morgan Stanley's chief China economist, said Trump's April 2 "Liberation Day" tariff announcement was the wake-up call that forced investors to at least hedge, if they weren't selling, U.S. assets. "Over the mid- and long-term, I think people start thinking: how to diversify assets in the future, rather than be stuck in the outdated mentality of dollar supremacy." A popular trade that involved buying cheap U.S. dollars in the Hong Kong dollar forwards market, known in markets as the gift that never stopped giving, also went into reverse since it rested on the Hong Kong dollar staying still. "Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding," said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its U.S. Treasury holdings and diversifying currency exposure into non-U.S. assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. "Repatriation talk is becoming reality," said Parisha Saimbi, Asia-Pacific rates and FX strategist at BNP Paribas in Singapore, as investors and exporters are either unwinding or rushing to hedge. "Whichever format it comes in, it suggests that the support for the dollar is shifting and it's turning lower ... I think it speaks to this idea that there is a de-dollarization in action." UBS estimates that if Taiwan's insurance companies increased hedging ratios to their 2017-2021 averages, it could be worth some $70 billion in U.S. dollar selling. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of U.S. trade talks. Still, the market seems to be voting with its wallet. "USD/TWD is a canary in the coal mine," said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. "Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning."
The Star
06-05-2025
- Business
- The Star
'Asian crisis in reverse' as currencies soar on the dollar
SINGAPORE/SHANGHAI: A wave of dollar selling in Asia is an ominous sign for the greenback as the world's export powerhouse starts to question a decades-long trend of investing its big trade surpluses in U.S. assets. Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore, South Korea, Malaysia, China and Hong Kong. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling. While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998 capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. "Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into U.S. Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long," said Gavekal's Gave. Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by U.S. President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into U.S. assets in two places. First, exporters, especially in China can expect fewer receipts as tariffs cut access to U.S. customers. Second, fear of a U.S. downturn casts a shadow over U.S. asset returns. "Trump's policies have weakened the market's confidence in the performance of U.S. dollar assets," said Gary Ng, senior economist at Natixis. Some are speculating on what markets have termed a "Mar-a-Lago agreement," he said, or a deal - named after Trump's gilded Florida resort - to weaken the dollar. Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. TALK BECOMES REALITY Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks - mostly dollars and mostly held by exporters - were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in U.S. stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. There are signs the dollar view is shifting from all corners. Goldman Sachs said in a note on Tuesday that investor clients had recently flipped from short yuan positions, to long positions, or in other words, they are shorting the U.S. dollar expecting further weakness. A popular trade that involved buying cheap U.S. dollars in the Hong Kong dollar forwards market, known in markets as the gift that never stopped giving, also went into reverse since it rested on the Hong Kong dollar staying still. "Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding," said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its U.S. Treasury holdings and diversifying currency exposure into non-U.S. assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. "Repatriation talk is becoming reality," said Parisha Saimbi, Asia-Pacific rates and FX strategist at BNP Paribas in Singapore, as investors and exporters are either unwinding or rushing to hedge. "Whichever format it comes in, it suggests that the support for the dollar is shifting and it's turning lower ... I think it speaks to this idea that there is a de-dollarisation in action." UBS estimates that if Taiwan's insurance companies increased hedging ratios to their 2017-2021 averages, it could be worth some $70 billion in U.S. dollar selling. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of U.S. trade talks. Still, the market seems to be voting with its wallet. "USD/TWD is a canary in the coal mine," said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. "Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning." - Reuters
