Strong GDP growth likely and further currency gains (Sep 09)

GDP growth across the region is likely to stay strong over the next few quarters as foreign conditions continue to improve and domestic demand stays resilient. Sustained capital inflows, higher external surpluses, and the prospect that central bank policy rates will move up well ahead of the US and Europe, should bring more Asian currency appreciation against the US dollar. The authorities will resist rapid moves but in the end are likely to tolerate significant gains to help keep inflation low and because regional currencies should move up against the US dollar as a bloc.