Asia forex gloom lifts slightly on dollar retreat and dovish Fed

Bengaluru

EMERGING Asian currencies are set to weaken further in the coming year, but not as much as thought a few months ago, as expectations the US Federal Reserve will raise interest rates more cautiously hold back the dollar, a Reuters poll showed.

Still, with many Asian central banks continuing to ease policy, the consensus from over 60 analysts polled by Reuters this week was for regional currencies to weaken 2-6 per cent by this time next year, with the Malaysian ringgit leading the pack. "With the Fed delivering a dovish message, Asia forex may continue to perform in the short term. We reckon, however, that the strength is unlikely to hold through the year, and expect some weakness to return," analysts at Citi wrote in a note.