Many Asian currencies have depreciated against the U.S. dollar in the last few years. We can blame it on lower global demand for exports, as well as lower oil prices. Emerging Asian markets such as Malaysia and Indonesia, which largely rely on oil exports, have taken the biggest hit.
However, we believe that some currencies in Asia will make a comeback against the dollar over the long-term. Here are the three of them:
Malaysian Ringgit
The Malaysian Ringgit, one of the worst performers in Southeast Asia, has been at its lowest level for two decades. Because Malaysia is an oil-dependent country, its currency suffered major declines due to weak oil exports. But ringgit is showing some sign of life. Since the early period of 2017, the currency is going up well against the U.S. dollar. Some of the biggest banks in the world also predict that the Malaysian Ringgit will end the year on a positive note.
Chinese Yuan
Last year was a year to forget for China as it suffered a string of declines. China’s GDP growth and retail sales growth suffered a 30-year low, and 15-year low, respectively. The country’s trade dispute with the United States has also created economic turmoil globally.
However, the Chinese yuan since the latter part of 2016 has gotten stronger. China’s goal to become the largest economic player in the world has opened room for the currency to maintain stability. China has inked currency swap deals with other economic powerhouses including Japan and Russia. Furthermore, the International Monetary Fund or IMF has made the Chinese Yuan part of its basket of reserve currencies.
Indian Rupee
Last year, the Indian Rupee joined the list of worst-performing currencies in Asia. But in a remarkable turnaround, the currency has rallied more than 3% against the U.S. dollar since February 2019. In a report by The Economic Times, Anindya Banerjee, Deputy Vice President Technical-Research, Kotak Securities, said the equity market flows drive the Rupee up. Banerjee said although volatility is expected after the country’s national elections, the Rupee will move forward in a positive direction.
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