Exchange Market Volatility Or Exacerbation, "Safe Haven Currency" Is Not Insured?

The recovery process of different economies in the world will increase the volatility of the foreign exchange market, and the position of "traditional" hedge assets such as the US dollar, yen and euro may also be challenged.

　　匯市波動或加強

UBS, the second largest foreign exchange dealer in the world, points out that the US dollar will probably change its role as a "safe haven" in the past 10 years in the next 10 years in view of the fact that the US economy will be better than Europe and Japan.

In a recent report, Mansoor Mohi-uddin, head of global foreign exchange strategy at UBS in Singapore, wrote that the US dollar will return to the trend of the early 80s and the late 90s, that is, it is positively related to the rise of the stock market, and that the increase in exchange rate volatility will enable Central banks to intervene more frequently in the foreign exchange market.

"Compared to the euro area, the UK and Japan, the fundamentals of the US economy are more attractive, and the US dollar may be positively related to investor sentiment in the next 10 years."

Mohi-uddin wrote in the report that it is very likely that the US dollar will continue to appreciate as investors' risk appetite increases.

The Fed will be the first major central bank to raise interest rates, and overseas central banks, sovereign wealth funds and US funds will strengthen the foundation of the US dollar.

"The trend of the US dollar and the stock market's trend is likely to appear in the second half of the year," Yao Qin, a foreign exchange trader at Shanghai branch of China Construction Bank, said in an interview with the first financial daily. "At the present time, the rise of the US dollar is mainly driven by risk factors. Until the financial market is completely calm, the market will begin to pay attention to the fundamentals.

Of course, the premise is not to repeat the situation similar to the European debt crisis.

Yao Qin also said that the US dollar is still optimistic in the medium and short term.

"In the short term, there should also be bad news in Europe. In the medium term, because of the spread factor, it is unlikely that the spread factor will become the main player this year, because the European debt crisis is also a drag on the US, so the US Federal Reserve may not be able to raise interest rates during the year.

The euro is basically stable, but it still takes a long time to build up the bottom.

He said so.

According to the latest expected median value of Bloomberg, the US economy will grow by 3.2% this year, while the UK, the euro area and Japan will grow by 1.2%, 1.1% and 2.1% respectively.

Another survey shows that the Federal Reserve will raise interest rates to 0.5% before December, while the European Central Bank and the Bank of Japan will maintain at least the current interest rate level within the year.

Mohi-uddin pointed out that the eurozone will have to continue to deal with the debt crisis brought by some member states. Japan needs time to get out of deflation, and Britain will have to deal with the deficit problem at a high historical level in the coming years.

"With the uncertainty of the European debt crisis, the foreign exchange market will face a high volatility risk in 2010."

Among them, the European Central Bank will face "greater" intervention pressure, especially if the euro falls to a long-term reasonable value of 1 euros to 1.2 U.S. dollars, the risk of the European Central Bank to take action will be greater.

The last time the United States, the euro zone, Japan, the United Kingdom and Canada joined the intervention to date back to September 2000, when the euro fell to 1 euros to 0.86 dollars against the dollar.

　　“避險貨幣”易主?

"Recently, there is a view that the" traditional "hedge assets such as the US dollar, the yen and the euro are losing their status, and some major emerging markets may eventually become new global capital destinations, especially RMB or will become one of the major reserve currencies.

"In our view, it is too early for us to challenge the position of the US dollar," Anderson, an economist at UBS global emerging markets, wrote in a recent report.

Anderson pointed out that although emerging market countries are financially better than developed countries, the assets of these regions are not "sparkled in the light of a safe haven".

"Although the recent volatility of emerging markets has weakened, it is far from the value of international capital reserves. In many emerging markets with fast growth, export expansion and high inflation, the central bank is still pursuing a relative peg to the US dollar exchange rate policy, and the intervention rate of the exchange rate is relatively large, coupled with the limited scale of the emerging bond market and the money market, as well as the stable system lacking capital access, making it difficult for these regions to become the reserves of international capital in the short term.

The report reads.

Yao Qin believes that although the economic recovery level, interest rate factor and financial situation, etc., the currencies of emerging market countries will appreciate the currencies of G3 countries in the medium term, but the overall anti risk ability of emerging market countries is not strong after all.

"There are already obvious asset bubbles in some areas. Once the US enters the cycle of rising interest rates, the bursting of some emerging markets is also dangerous."

He said.

"The risk aversion should be those countries with high sovereign credit ratings, such as the United States, Norway or other countries with AAA rating," Jiang Lijun, chief foreign exchange analyst at XTB, said. "Countries with high credit rating and relatively stable credit are worth investing. Countries with better credit conditions are less likely to have a similar situation in the euro area, and the risk of economic shocks is not great."