Since the USD turned in early July, Asian FX has been outperforming other currency blocs. An equally weighted exposure to Asian currencies versus the USD would have produced a total return of +0.8% since June 30th, compared to losses of -1.3% for Latam, -2.6% or G10, and -3.3% for EMEA. The standard deviation of returns has been the lowest in Asia, and even the weakest performing KRW has narrowly edged out the top G10 pair (Chart 1). Aside from domestic factors, there are two big trends driving Asia’s relative strength:
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