As threats hit Asia from outside and within, the region’s currencies are looking impressively ready for prime time.
Between the US Federal Reserve’s tightening cycle in Washington, questions surrounding Covid-19 decisions in Beijing, and the yen’s bonkers gyrations, Asia’s 2023 still looks wildly uncertain – and potentially chaotic.
Optimism about China reopening trade dominated markets this week as President Xi Jinping bows to the biggest protests since 1989. Investors are cheered, though it’s unclear how Beijing might respond to a jump in infection rates. And if China does decisively exit from “zero Covid,” might the Fed hit the brakes anew to head off bigger inflation outbreaks?
The good news is that Asia’s currencies are having a moment that seemed unlikely amid the worst of the Covid turmoil in 2020 and the 2013 “taper tantrum” trauma that shook the region.