Weaker greenback raises risk of currency mismatch for Asian insurers holding USD assets
Goldman Sachs has estimated that for every 10% of Taiwan dollar appreciation, the country’s insurers would incur an unrealised currency loss of US$18 billion
Add BT as a preferred source
[SINGAPORE] A mismatch between the currencies in which insurers’ assets and liabilities are held can put pressure on their capital and ability to fulfil the liabilities.
This is the issue currently confronting insurers in Taiwan, where the majority of assets are invested in US dollar (USD) bonds, but liabilities are in the domestic Taiwan dollar. A weaker USD has meant that the value of assets has fallen, and an insurer may need to put in additional capital or equity. The US Dollar Index has fallen by more than 8 per cent in the year to date.
What is the likelihood that this could happen in Singapore?
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
TRENDING NOW
Jumbo Seafood to close flagship East Coast Seafood Centre outlet on Sep 30
Shanda co-founder sells Tanglin Hill bungalow for S$76 million
Singapore developer in limbo after Timor-Leste scraps major township project
Trek 2000 shares jump 41.5% after Osim founder Ron Sim drops claims, sells 7.3% stake to Azure Capital
