Executive Summary
We delivered a detailed analysis of real exchange rates across key Asian economies for a global asset manager, helping them identify the underlying causes of persistent currency misalignments. The insights deepened the client’s understanding of regional FX dynamics and enhanced their ability to make informed investment decisions in emerging markets.
Client Background
The client is a leading global asset manager with a significant focus on emerging markets. With currency valuation playing a pivotal role in long-term investment strategy, they sought a deeper understanding of structural drivers behind exchange rate deviations in Asia.
Challenge
Despite apparent misalignments in real exchange rates across several Asian currencies, the causes were not well understood. The client needed a comprehensive framework to interpret these movements, differentiate between temporary distortions and structural factors, and benchmark regional trends against global norms.
Solution
We conducted a rigorous investigation into the drivers of real exchange rate misalignments, assessing a broad set of economic and policy-based explanations. These included data quality issues, cross-border labour dynamics, housing subsidies, monetary policy regimes, trade and capital flows, and pricing anomalies. Drawing on academic literature and global comparisons, we delivered a series of 30-slide, visually driven reports for each currency. Regular check-ins with the client allowed us to tailor the analysis to evolving priorities and dive deeper into areas of specific interest.
Detailed Results
Our analysis equipped the client with a nuanced, evidence-backed view of long-term currency valuation across multiple Asian markets. This improved their strategic positioning and provided a robust foundation for evaluating FX-related risks and opportunities in their portfolios.
