Thailand was one of several nations tagged as possible currency manipulators by a US Treasury, while the Baht's rise raises domestic concerns of falling exports at a time when the economy, with with tourism virtually at a standstill, private investments down nearly 9% and year-on-year exports fallen 7.5%, is desperate for demand to pick up. Analysts argue the Baht's appreciation may be attributed to Thailand's large foreign exchange reserves, and the BOT has introduced some measures, such as increasing the foreign securities investment limit, to slow the appreciation (1).
Another Asian currency which is appreciating without the backing of a recovering economy, is the Philippine Peso, which approached its 5-year high, while the overall economy is well into a major recession with imports falling nearly 20% in October compared to last year, the 18th in a series of monthly declines. With many resting their hopes on a Covid vaccine to solve their problems, economists are instead focusing on President Duerte's failure to implement microeconomic reforms to add stability to the business cycle, putting focus instead into his war on drugs. The rising Peso projects a widening budget-deficit as government bonds return higher yields, boosting debt sales (2).
Despite some local issues, Asian economies still offer greater potential with sounder monetary policies than the old economies of Europe and the US, therefore the appreciation of Asian currencies may continue in 2021.
China's Yuan continues its upward trajectory as China's domestically-focused policy has benefitted consumer industries, propelling its economic recovery. With Chinese Big Tech looking to create smart-cities, and robots, telemedicine, and fintech growing in demand, coupled with the stock market rally despite the Ant IPO incident, China's innovativeness and new-technology focus maintains interesting growth opportunities for investors (3).