Leading financial markets worldwide are currently bracing for one of the year’s most anticipated events. The Federal Reserve has announced its decision to cut rates this September, an event that usually comes with heavy global repercussions.
While the market braces for heavy dollar devaluation, certain ASEAN currencies may amp up, making the most out of the event above.
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Regional Currencies To Surge Post-September Fed Rate Cut
According to Forbes, markers strongly anticipate that the inevitable Fed rate cut announcement will arrive on September 18. In his earlier address, Fed Chair Jerome Powell asserted that a time to adjust monetary policies had finally arrived.
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell stated.
The said event is set to shake the global financial markets, making the dollar appear unattractive due to its recent monetary policy change. This will compel investors to find refuge in other currencies, notably ASEAN and APAC, which may deliver stabilised results.
“As the dollar weakens, APAC currencies could see further upside over the next 6–12 months. With an imminent Fed rate-cutting cycle, setting the stage for further broad USD weakens, we move the dollar to our least preferred in global strategy this month and maintain a positive outlook on APAC currencies, forecasting a 1.5%-3.0% upside over the next 6-12 months.” As stated by Min Lan Tan, Head of the Asia Pacific Investment Office at UBS
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3 South East Asian Currencies To Spike Post September Fed Rate Cut
As per the asset, three noteworthy ASEAN currencies may surge at a higher pace once the fed rate cuts are finalized. This includes Malaysian Ringgit, Indonesian Rupiah, and Thai Baht.
According to CGS International, the ringgit may surge by 4.40% against the greenback, while the Indonesian rupiah may spike to 15,650 against the US dollar.
The Thai Baht may end the year on a bullish note, rising to hit 34.50 against the USD.
The September rate cut anticipation has already started to show its effect. Investors have started to pivot to ASEAN economies to find refuge against the stark volatility that the event may usher in. There has been another surge in Malaysian stocks.
“On inquiries from investors, we have seen a jump in interest in Malaysian stocks,” said Paul Chew, head of research at Phillip Securities Research per Asia Nikkei.
At the same time, ASEAN currencies have emerged as the best-performing currencies against the USD recently, inviting a renewed influx of investment on all its leading financial fronts.
“The “best-performing ASEAN equity market has been Malaysia,” Chew said. “Investors are upbeat about the structural reforms underway in the country… In the background are several initiatives to drive more investments into the country, such as data centers.” Chew shared.
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