Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

EM FX volatility has dropped to its lowest level since the start of pandemic, which is likely leading to a positive scenario for currencies. In this note, we highlight the currencies most likely to benefit in such an environment.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

EM FX volatility has dropped to its lowest level since the start of pandemic, which is likely leading to a positive scenario for currencies. In this note, we highlight the currencies most likely to benefit in such an environment.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Declining EM FX Volatility Foreshadows a Positive Environment

In this note, we identify the currencies that have outperformed and underperformed as EM currencies have overall appreciated with the dollar depreciating since the end of March. We also place our outstanding trade recommendations in the context of the relative performances of EM currencies.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

In this note, we identify the currencies that have outperformed and underperformed as EM currencies have overall appreciated with the dollar depreciating since the end of March. We also place our outstanding trade recommendations in the context of the relative performances of EM currencies.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Updating the Winners and Losers in the EM Turnaround

In this note, we discuss the currencies that can perform well even if, following the sharp depreciation over the past two months, the US dollar becomes rangebound, taking away the impetus for EM currencies to appreciate on aggregate.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

In this note, we discuss the currencies that can perform well even if, following the sharp depreciation over the past two months, the US dollar becomes rangebound, taking away the impetus for EM currencies to appreciate on aggregate.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: EM Currencies to Target in the Late Recovery Phase

Economist, Centennial Asia Advisors

Nicholas Chia

Economist

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

<ul style="list-style-type: square;">
<li>The pandemic is easing, raising hopes for the recovery to regain momentum as lockdowns come off. The government is willing to countenance more stimulus, but the measures are likely to be more targeted at sectors hit hard by the lockdowns. Furthermore, there is very limited fiscal headroom for sweeping fiscal relief so more indirect measures will feature in the new relief bill, if it even materialises in the first place.</li>
<li>The government intends to dip into the capital markets for another INR1.6tr in additional borrowing, on top of the INR12tr it is budgeting to finance the budget deficit. This will seriously test the bond market's ability to take in such a deluge of borrowings in the near-term.</li>
<li>The RBI could expand and extend its G-SAP (i.e. QE) policy moving into 3Q21. But yields will come under pressure from the widening yield differentials with the US as well as the incoming deluge of borrowings. In turn, the <a href="https://www.smartkarma.com/entities/inr" target="_blank" data-smartkarma-citation="entities:22832:1" rel="noopener">INR (USDINR CURNCY)</a>'s rally is likely to hit a wall in the near-term after clawing back most of the losses it sustained in May - it is the best performing currency this month after rising 2.2% from April.</li>
</ul>


The pandemic is easing, raising hopes for the recovery to regain momentum as lockdowns come off. The government is willing to countenance more stimulus, but the measures are likely to be more targeted at sectors hit hard by the lockdowns. Furthermore, there is very limited fiscal headroom for sweeping fiscal relief so more indirect measures will feature in the new relief bill, if it even materialises in the first place.
The government intends to dip into the capital markets for another INR1.6tr in additional borrowing, on top of the INR12tr it is budgeting to finance the budget deficit. This will seriously test the bond market's ability to take in such a deluge of borrowings in the near-term.
The RBI could expand and extend its G-SAP (i.e. QE) policy moving into 3Q21. But yields will come under pressure from the widening yield differentials with the US as well as the incoming deluge of borrowings. In turn, the INR (USDINR CURNCY)'s rally is likely to hit a wall in the near-term after clawing back most of the losses it sustained in May - it is the best performing currency this month after rising 2.2% from April.


India: Limited Upside To Rally In Rupee Moving Forward

The US dollar has weakened since the end of March, leaving it flat from the start of the year. If the dollar moves sideways for the time being, as we expect, then it should lead to a carry trade environment. We identify the best EM currencies for such an environment.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

The US dollar has weakened since the end of March, leaving it flat from the start of the year. If the dollar moves sideways for the time being, as we expect, then it should lead to a carry trade environment. We identify the best EM currencies for such an environment.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Which Currencies to Target in a Carry Trade Environment?

India

The Indian rupee is the official currency of India. 

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INR (USDINR CURNCY)

FX Dashboard: Declining EM FX Volatility Foreshadows a Positive Environment

With EM FX volatility dropping to its lowest level since the start of pandemic, we highlight the currencies most likely to benefit in the likely...

Gautam Jain, PhD, CFA

FX Dashboard: Updating the Winners and Losers in the EM Turnaround

We identify the currencies that have outperformed and underperformed with the dollar depreciating since the end of March and place our outstanding...

Gautam Jain, PhD, CFA

FX Dashboard: EM Currencies to Target in the Late Recovery Phase

In this note, we discuss the currencies that can perform well even if the US dollar becomes rangebound going forward, taking away the impetus for...

Gautam Jain, PhD, CFA

India: Limited Upside To Rally In Rupee Moving Forward

The RBI is expected to extend and expand the G-SAP in the upcoming MPC meet, but its ability to keep yields under control will be seriously tested...

Nicholas Chia

FX Dashboard: Which Currencies to Target in a Carry Trade Environment?

If the dollar moves sideways for the time being, as we expect, then it should lead to a carry trade environment. We identify the best EM currencies...

Gautam Jain, PhD, CFA

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52-week Range

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