The recent fall in Asian currencies is likely to reverse later in the year, if as we anticipate, the US Fed starts to cut interest rates soon. A rebound in Asian currencies should create an opportunity for policymakers who have been worried about currency weakness to begin their own easing cycles.
Malaysia’s central bank is likely to leave interest rates unchanged at its meeting on Wednesday. Worries about inflation mean it is likely to be the only major central bank in Emerging Asia not to cut interest rates this year.
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