APAC FX: Growth resilience but downside risks – BNY

BNY’s Head of Markets Macro Strategy Bob Savage highlights that improving regional PMI momentum, South Korea’s WGBI inclusion and solid export data support growth across Asia-Pacific, but geopolitical uncertainty and higher Oil prices weigh on FX. The bank sees investors focused on risk reduction, with policy support cushioning equities while remaining negative for regional currencies and fixed income.

PMI momentum, WGBI flows and FX risk

"Next week’s Asia calendar is led by China and regional March PMI, alongside Japan’s Tokyo CPI and Q1 Tankan survey, and the start of South Korea’s inclusion in the FTSE World Government Bond Index (WGBI)."

"South Korea’s March exports, CPI and industrial production are likely to affirm continued growth momentum."

"Foreign investors sold nearly $20bn of South Korean equities (more than $30bn YTD) and around $11bn of Taiwan equities in March."

"Regional central banks are increasingly relying on macroprudential tools rather than monetary policy."

"Overall, risks remain skewed to the downside, weighed down by geopolitical uncertainty and the energy shock. Policy support may cushion equities but is likely negative for FX and fixed income."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)