Asia Strategy Nov-15 · 2017-04-13 · Asia FX Strategy ― Nov ‘15: Naughty or Nice? ― That...

Asia FX Strategy ― Nov ‘15: Naughty or Nice? ―

That purportedly determines if children get presents from Santa Claus. And that is the EM/Asia dilemma as markets brace for the Fed’s “lift off” as early as December. “Nice” corresponds to markets gently acclimatizing to a very gradual Fed tightening policy, consequently resulting in post-Fed hike rebound in AXJ. There is some scope for this, but our suspicion is that any “Santa rally” will be fleeting . Instead, EM/Asia markets are more likely to have “Naughty” relapse; whereby the confluence of China, commodity and debt build-up risks revives downside pressures. Further out though, as China finds a more emphatic bottom, feeding into more durable commodity stability (even mild pick-up) and front-loaded USD gains ease, AXJ could partly regain ground more durably.

24 Nov 2015

Mizuho Bank, Ltd. Singapore Treasury Division

Vishnu Varathan Senior Economist [email protected] Chang Wei Liang FX Strategist [email protected]

- 1 -

Executive Summary

• Exacerbated policy divergence on Fed rate hike vis-à-vis further ECB easing and BoJ on prolonged hold should underpin USD outperformance in G3 space

• AXJ: Post-Fed rate hike (Dec?) relief rally likely to be fleeting and hollow with, volatility set to persist till mid-2016 amid China, commodities and debt risks.

• CNY: SDR inclusion does not preclude near-term downside consistent with

broad directional alignment with AXJ; but only less volatile.

• INR: Prolonged Oil weakness benefits of diminished “twin deficits”. Alongside anchored inflation and FX reserve accumulation INR is a lower beta (risk) bet.

• SGD: “Under-appreciated” as S$NEER slippage overreacts to deflation risks;

as inflation picks up and AXJ firms S$NEER into mid-2016 could out-perform.

• MYR: Ongoing trade adjustment look insufficient to compensate for negative commodity sentiment and softening domestic demand

• IDR: Ongoing reforms are a positive step for the medium term, but unlikely to

buffer against near-term commodity weakness and capital outflows

• THB: Sluggish external demand has been a drag on THB, while domestic sentiment remains too muted to assist

• PHP: Short-term outlook threatened by easing remittance growth and manufacturing export weakness

• VND: Net trade deterioration (C/A) and further AXJ pressures warrants

early-2016 devaluation, exploiting low inflation; cumulative 4% drop likely.

• AUD: Diminished odds of imminent rate cut will buoy AUD durably only later in 2016; but copper and iron ore plunge warn of AUD buckles near-term.

• KRW: Firmer domestic demand a plus, but persistently weak external

demand weakness should limit near-term upside

• MYR far higher beta than IDR especially if oil slumps; INR is relatively more buffered in contrast. S$NEER out-performance on risk-reward is notable.

24 Nov 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16

USD/JPY 123 122 122 120 118 116

EUR/USD 1.06 1.11 1.10 1.12 1.15 1.16

USD/CNY 6.39 6.43 6.45 6.36 6.30 6.25

USD/INR 66.4 66.5 66.8 67.0 63.0 62.5

USD/KRW 1152 1190 1200 1170 1140 1110

USD/SGD 1.41 1.43 1.43 1.38 1.34 1.33

USD/IDR 13705 14200 14500 14000 13750 13500

USD/MYR 4.25 4.40 4.40 4.15 4.00 3.90

USD/PHP 47.1 47.5 47.5 46.5 45.7 44.9

USD/THB 35.8 36.5 37.0 36.5 36.0 35.5

USD/VND 22490 22550 23000 23000 23000 23000

AUD/USD 0.72 0.70 0.68 0.74 0.76 0.76

- 2 -

Global FX: Policy divergence underpins USD

G3 policy divergence becoming more pronounced

Sources: Reuters, Mizuho Bank Singapore Treasury

Fed looks set to initiate a rate hike cycle soon

Sources: Reuters, IMF, Mizuho Bank Singapore Treasury

Weak inflation expectations requires more ECB easing

Sources: IMF, Mizuho Bank Singapore Treasury

Net exports reversed to a drag on Japan’s growth

Sources: CEIC, Mizuho Bank Singapore Treasury

• Yellen’s comment that there is a “live possibility” of a rate hike coupled with a stellar

Oct non-farm payrolls read have elevated expectations of a rate lift-off in December.

• With US inflation likely to trend higher from here on the fading of base effects from the decline in oil prices and stronger USD, and with China and financial markets showing signs of stability, the outlook has turned supportive for a rate hike to us.

• While markets have priced in the December rate hike already, we think that market pricing for the path of interest rates still look too dovish, with just two more hikes till end 2016. Thus, we think USD upside might still manifest post-FOMC if the Fed maintains its guidance for four more rate hikes next year in its projections.

• In Europe, Oct ECB minutes highlighted that some ECB officials were already calling for additional easing. With Draghi pledging to “do what we must” amidst a weakening in core inflation and inflation expectations, markets are expecting a further deposit rate cut and an extension of QE in the promised December policy review.

• However, given that a significant amount of easing has been priced in, we expect that EUR downside should be constrained unless ECB surprises with a substantial increase in asset purchases. Bundesbank buy-in remains a key barrier to that, we think.

• Meanwhile, Japan entered into a technical recession in Q3 as net exports contracted amidst a slowdown in Asia led by China.

• With consumption easing and a delayed recovery of capital expenditure, we think risks of Japan slipping back into disinflation cannot be discounted. News that unions are dialing back wage demands for next year pose yet another dent to expectations.

• While BoJ is unlikely to announce additional QQE for now, USD/JPY could stay supported on this risk as progress towards the 2% inflation mark remains uncertain.

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Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15

G3 - 1Y bond yields (%)

German 1Y US 1Y Japan 1Y

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

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10.00

90 92 94 96 98 00 02 04 06 08 10 12 14 16

Fed Funds Rate - Actual vs Model

Actual Fed Funds Target (%)

Model Fed Funds Rate (2016:based on FOMC Sep-15 forecasts)

+/- 1 std error

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0.50

1.00

1.50

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2.50

3.00

Nov 12 May 13 Nov 13 May 14 Nov 14 May 15 Nov 15

EZ - Inflation expections vs ECB policy rate

ECB MRO rate EZ 5y5y breakeven inflation rate

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-4.0

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0.0

2.0

4.0

6.0

Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15

Japan - GDP (2q/2q saar)

Consumption Govt Investment

Change in Stocks Net Exports GDP 2q/2q saar

- 3 -

AXJ: Naughty or Nice?

• Nascent recovery from troughs alongside increased divergence in AXJ 1 begs the

question of whether AXJ weakness is now fully behind us. We think not.

• Admittedly, “front loaded” USD surge (AXJ sell-off) as a consequence of Fed hikes probably sets the stage for “buy the fact” AXJ bounce post-Fed hike.

• But bets on sustained “Santa rally” are likely to be disappointed as currency dent from exodus of funds from EM remains highly likely into early-2016; at least!

• For one, USD funding squeeze may broadly pressure Asian currencies, interrupting relief bounce after Fed hike while asset markets re-price EM Asia assets.

• Crucially, Santa’s “naughty or nice” list, featuring China exposure, commodity vulnerabilities and debt/external metrics will drive, and differentiate AXJ impact.

• Sustained pick-up in AXJ requires emphatic China bottom corresponding to broader global recovery; not merely USD moderation from assurances about “gradual” US hikes.

• Thus, AXJ weakness from China trade links may only dissipate into late-Q1 early-Q2 2016 as China stabilizes; with KRW, TWD and SGD poised for more sustained pick-up.

• But commodity plays piggy-backing China is nuanced by OPEC’s supply-push, retarding energy rebound. So AUD is better-placed than MYR unless oil prices surprise upside; whereas INR remains the biggest beneficiary of prolonged or renewed oil slippage.

• IDR outperformance from fiscal stimulus could dissipate on debt burden and FX mismatch; but MYR is worse off. And SGD will pick-up as inflation does; but MYR under-performance could be an impediment for now.

1 AXJ: Asia ex-Japan Currencies

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Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15

Tighter clustering in H1 has given way to increased divergence! More idiosyncratic moves also likely though overall fragilities remain

(% Chg vs. USD since Start-2015)

INR MYR THB IDR PHP JPY

KRW TWD AUD EUR SGD CNY

Sources: Bloomberg, Mizuho Bank - Singapore Treasury Div.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

2

4

6

8

10

12

14

16

18

20

VN MY TH TW KR CN SG* IN PH ID HK*

Taiwan, Korea, Malaysia & Thailand are most exposed to China directly. But vis-a-vis US exposure, Singapore ecli pses Malaysia

and Indonesia is more exposed than Thailand (as % of GDP) .EU US Japan China China-US Ratio (RHS) EU/US Ratio (RHS)

Sources: CEIC, Mizuho Bank Singapore Treasury Div.* Domestic exports used as entrepot status distorts exports reliance for SG & HK.

China-US Ratio is 5.5 for HK

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

0

100

200

300

400

500

600

700

800

900

1000USDbn

Emerging Asia - Reserves vs International Loans

FX Reserves International Loans Intl Loan Coverage Ratio (rhs)

- 4 -

CNY: SDR Inclusion

• Despite being a longer-term positive2, IMF priming (vote on 30th Nov) CNY for SDR inclusion is not an immediate game-changer materially augmenting CNY trajectory.

• Point being, potential for global assets and FX reserves re-allocation into CNY assets to catch up with the SDR inclusion (Oct 2016) weights is significant, but not imminent!

• For one, SDR re-constitution is deferred till Oct 2016. Crucially, dismantling capital

controls and wider benchmark inclusion are preconditions to scale up CNY allocation.

• What’s more, China must sufficiently deepen the sovereign bond market to serve as a credible reserve asset; and until then, reserve currency premium for CNY will elude.

• Upshot: SDR inclusion will not immediately boost CNY. But equally, conspiracy

theories that CNY will be allowed to drop (or devalued significantly) are misguided.

• Instead, CNY trades will be dictated by three main drivers. First, in line with market-driven cues, USD/CNY will broadly track USD cues around upcoming FOMC meets.

• Second, and crucially, CNY slippage and volatility will be significantly more subdued

vis-à-vis other EM/Asian currencies given trade-weighted approach to CNY valuation and the premium attached to FX stability as the building block for economic soundness.

• Finally, CNY-CNH deviation will be reined to mitigate accounting and arbitrage distortions. CNY slippage into H1 2016 to give way to some recovery in late-2016.

2 Please see recent publication (Mizuho Flash – “SDR inclusion for CNY is a Long Game”; 16th Nov 2015)

40

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30

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7.5

7.7

14

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16

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15

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2.4 4

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15

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13

.6 18

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4.9

5.0

11

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64.1

20.7

3.9

4.2

1.9

0

10

20

30

40

50

60

70

USD EUR GBP JPY CNY

Despite China's large exports exposure, the low allocation

of FX reserves holds back SDR weights; and this will take

time to build (%)

2015 SDR Weigthts * (assumed CNY weights)

GDP share (PPP-based, 2010-14)

Global Exports Share (2010-14)

Share of Allocated Global FX Reserves (as of Q1 2015)

Sources: IMF SDR Review Report (Aug 2015), Mizuho Bank Singapore Treasury Div.

43

.1

38

.5

9.6

2.0

0.6

42

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37

.1

11

.6

1.8

1.4

0

5

10

15

20

25

30

35

40

45

50

USD EUR GBP JPY CNY

Until China's global bond liquidity deepens, and is

crucially complemenetd by unfettered convertibility,

reserve allocation will undershoot (% of Global Share)

International Debt Securities (Q1 2015)

International Debt Securities Issuance (2014)

Sources: IMF SDR Review Report (Aug 2015), Mizuho Bank Singapore Treasury Div.

115

120

125

130

135

140

145

150

115

120

125

130

135

140

145

150

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

CNY NEER appreciation was stretched near-4% per annum (since 2005); thus "devaluation" released some pres sures

alongside market-based fixing . (Index 2005=100)

CNY NEER

4% appreciation p.a.

3% appreciation p.a.

3.5% appreciation p.a.


One-off devaluation ==> measured "catch-down" for trade-weighted CNY. Consistent with broader stability at reasonable valuation.

5.90

6.00

6.10

6.20

6.30

6.40

6.50

6.60

5.90

6.00

6.10

6.20

6.30

6.40

6.50

6.60

Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15

"One-off" CNY Devaluation as a transition to market -based fix ; CNY-CNH gap "managed" for now but volatility and "risk off" could

retard convergence to Q3 2016

USD/CNY

Trading Bands

USD CNY Fix

USD/CNHSources: Reuters, Mizuho Bank Singapore Treasury Div.

Stronger

15 Mar 2014:USD/CNY bands doubled to +/-2%.

11-Aug: 1.9% reference devaluation followed by a fe w sessions of self-reinforcing sell-off as fixing shi fted to market-based mechanism. CNY sell-off quelled by PBo c intervention/clarification

- 5 -

INR: Lower Beta?

• What is notable is that INR has evolved from the worst-hit “fragile five” currency during “taper tantrums” to one of the lower beta bets in EM Asia; and justifiably so.

• And oil has a large role to play. Insofar that soft oil prices keep the C/A deficit reined in,

then INR is in a much firmer position helped by capital inflows that support INR.

• Apart from the C/A deficit dampening impact from lower oil import bills (that helps offset soft exports too) softer oil prices have facilitated fuel subsidy revocation. And all else equal, fiscal consolidation is also a positive for the INR too.

• Finally, the RBI has enhanced India’s macro stability by accumulating FX reserves

strategically and targeting price stability; both significantly lower INR stability risks.

• The upshot is that the confluence of favourable externalities like oil prices (and the consequent narrowing of the “twin deficits”) and prudent policy have rendered INR a lower-beta (and hence a lower risk currency) within Asia.

• But INR is not absolved of near-term downside risks. For one, broad-based USD

strength and wider EM (Asia) sell-off will be hard to side step.

• What’s more, BJP’s recent losses in Bihar state point to risks of political stalemate in Raj Sabha hijacking the passage of key reform bills (e.g. land, labour, etc). And this could stifle investments. Finally banks are saddled with NPLs and suffer lack of capital.

• Upshot: For now, USD/INR test above 68 still a risk. But as global recovery and India’s pick-up broadens managed appreciation to sub-62 by end-2016 is viable.

-46.0 -43.0 -48.8-55.0

-43.5-47.4

-29.3 -30.4 -28.7-33.0 -39.4

-38.8

-26.0-32.2 -35.8

125.5116.5 120.0

127.7 126.5120.9109.6

108.4

111.3 113.3120.9 117.4

96.1 98.8102.0

79.473.5 71.1 72.7

83.073.4

80.378.1

82.680.3 81.5 78.7

70.1 66.6 66.2

(100)

(50)

0

50

100

150

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(50)

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50

100

150

Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15

India's Net Trade Oil Benefits Coming Through; Gold P ick-Up (Curbs rolled back) Offset to some extent (US$bn)

Oil Imports Gold Imports Trade Bal

Total Imports Total Exports

Sources: CEIC; Mizuho Bank Singapore Treasury Div.

0

2

4

6

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10

0

2

4

6

8

10

06 07 08 09 10 11 12 13 14 15

Current Deficit vs. Capital Account Surplus show ov erall external position supports INR (4Qma, % of GDP)

C/A Deficit (% of GDP)

Capital Inflows (% of GDP)

Sources: Bloomberg, CEIC, Mizuho Bank Singapore Treasury Div.

The Capital Account (Surplus) to C/A (deficit) dynamics have turned positive for the INR. At this point capital inflows can comfortably finance the C/A gap. This renders the INR less vulnerable from a relative stand-point as well as in absolute terms given reduction in C/A deficit.

(25)

(20)

(15)

(10)

(5)

0

5

10

150

1

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5

6

7

8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Declining Budget Deficit to Boost INR GainsBudget Deficit (% of GDP, LHS)

INR (% Chg; YoY; RHS; inverted)

Sources: MoF, CEIC, Mizuho Bank Singapore Treasury

2008 GFC

2013 "Taper"

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06 07 08 09 10 11 12 13 14 15

RBI has built up FX reserves; much stronger position than during "taper tantrum" (USD bn)

FX Reserves (LHS)Gold (LHS)Others (LHS)Imports cover (RHS, ratio)

Sources: CEIC, Mizuho Bank Singapore Treasury Div.

- 6 -

SGD: Under-appreciated?

• Our warning that SGD was a binary bet resonated as less dovish than expected MAS

outcome (slope reduction vs. step depreciation) triggered S$NEER bounce.

• Nonetheless, post-MAS SGD gains have proven to be fleeting, conceding ground to fresh downside risks in China and broad-based USD strength – as reflected in band shift.

• In addition, disappointing growth and inflation in Singapore have also knocked the

S$NEER back down to the softer side of the trading bands.

• To the extent that the latter partly reflects prolonged downside risks to inflation (or deflation) that could trigger further policy easing, we see scope S$NEER catch-up later.

• Fact is, there are a lot of one-off factors such as tariff reductions, SG50 give-aways and

pioneer healthcare benefit that should fade off headline dis-inflation alongside oil effects.

• Thus, barring major collapse in global commodity (especially oil) prices, S$NEER is likely to pick-up to the firmer side of the trading bands as inflation firms.

• In which case, SGD could be “under-appreciated” at this point of time.

• In any case, broadening global recovery and China traction (with CNY gains) should

bolster SGD tone into H2 2016; especially if MYR regains with gradual/moderate oil price stabilization higher from a low base (being a large S$NEER basket component).

• Upshot: While near-term China/commodity slippage and Fed hike risks could tilt

USD/SGD towards 1.44, pullback below 1.35 is on the cards later in 2016 if worst case scenarios are avoided (by China and Malaysia in particular).

101

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109

Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15

S$NEER has slipped back to the weaker side of the b ands as post-MAS jump on less dovish surprise proves to be fleeting; soft in flatoin and weak growth drag

NEERMid-Point

Sources: MAS, Bloomberg, CEIC , Mizuho Bank, Singapore Treasury Div.

+/- 2% from S$NEER mid-pt

Stronger SGD on a trade-weighted basis

Post-MAS jump in S$NEER

30-day moving average of S$NEER

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05 06 07 08 09 10 11 12 13 14 15

S$NEER "undershoot" partly reflects "deflation risk s; but is overdone. Gradual inflation pick-up into 2016 reveals scope f or S$NEER bounce

CPI (% YoY; LHS) SGD NEER Mid-pt Deviation (bps, smoothed weekly, RHS)


S$NEER tends to trade at the stronger side of the policy mid-point (+ve deviation) corresponding to inflation unless there are negative shocks to growth. So softer than expected inflation could coincide with sub-mid-point S$NEER.

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1.46Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

Band Pressures reflect broad-based USD strength/AXJ weakness; intra-band slippage on growth-inflation m iss

USD/SGD, inverted; +/-2% bands)

SGD (Actual)

SGD (Mid Pt)

Sources: Bloomberg, CEIC, Mizuho Bank, Singapore Treasury Div

Stronger SGD

- 7 -

MYR: Further trade adjustment needed

Growth slowing on weaker consumption/investment


Five quarters of export compression due to oil slippage


Soggy production on diminished domestic demand


Import compression supports trade surplus


• USD/MYR has been trading in a wide range between 4.08 to 4.40 since October, with the cross buffeted by volatile swings in oil prices and US rate expectations.

• While large exchange rate gyrations are inevitable amidst market shifts, there are worrying signs that real activity could have also been impacted, perhaps in response to a loss of confidence given extended capital outflows.

• Malaysia’s Q3 sequential GDP growth came in at its lowest since Q1 2013, with better net exports failing to offset a slowdown in domestic consumption and investment.

• While the April GST hike could have imposed temporary headwinds, we are watchful of further deterioration in domestic demand, which could see Bank Negara opting to cut rates even as the Fed embarks on a hiking cycle.

• The cheaper MYR may have promoted trade adjustment on import demand compression, but even that has not been sufficient to buffer against a worrying decline in the current account surplus as both services and income deficits widen.

• Thus, we think that MYR losses might still have further room to run amidst sluggish external demand and commodity weakness.

• With a Fed rate hike in December possibly exacerbating capital outflows again, we think USD/MYR will continue to be pressured higher towards 4.40 levels.

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Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15

Malaysia - GDP 2q/2q saar


Net Exports Change in Stocks GDP 2q/2q sa

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Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15

Malaysia - Exports by Products (q/q saar)

Food and Crude Materials Mineral Fuels and ChemicalsElectronics Other ManufacturesExports q/q saar

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14


Malaysia - Industrial Production (6m/6m saar)

External Oriented (6m/6m saar) Domestic Oriented (6m/6m saar)IP (6m/6m saar)

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USD bn% 6m/6m saar

Malaysia - Trade Developments

Trade Bal (rhs, USDbn, 6m saar) Exports 6m/6m saar

Imports 6m/6m saar

- 8 -

IDR: Limited buffers from reforms

Domestic consumption and net exports support growth


Foreign equity outflows contingent on China/reforms


Improving trade balance buffers capital outflows


Extended commodity weakness still pose IDR drag

Sources: Reuters, Mizuho Bank Singapore Treasury

• Amidst concerns of a slow pace of reforms, we think momentum could be energized by two developments: 1/Jokowi’s consolidation of political power with Golkar joining his coalition, and 2/A potential cabinet reshuffle to fortify the economics-related ministries.

• With both Golkar and PAN now switching to back Jokowi, we think that legislative hurdles to reforms would be reduced, in stark contrast to politics in India.

• Already announced reforms to relax licensing requirements, facilitate land acquisition for infrastructure, subsidize industrial energy costs, control minimum wage and implement tax incentives for investment have assuaged investor unease, but we think more could be done to relax foreign ownership limits as well.

• One promising development is a new central agency to fast track infrastructure investment projects worth over $500bn, which should eliminate operational bottlenecks and attract private investors who are expected to co-fund at least a third of the spending.

• However, it remains too early to say how well Indonesia can execute on its infrastructure plans and further reforms, and we think IDR will remain dogged in the interim by the ongoing selloff in commodities and risks of capital outflows on rising USD rates.

• While an improving trade balance and steady growth could buffer, diminished FX reserves (below USD 100bn now) suggest that downside risks remain sizeable.

• We are cautious on the IDR in the near term, targeting further upside towards 14500 levels in Q1.

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Indonesia - GDP 2q/2q saar


Net Exports Change in Stocks GDP 2q/2q saar

12000

12500

13000

13500

14000

14500

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Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15

Indonesia - JKSE vs USD/IDR

Jakarta Stock Exchange Composite USD/IDR (rhs, inverted)

-40

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20


USD bnIndonesia - Basic balance

Net Income & Transfers Trade Balance

Net FDI Basic Balance 12M sum

400

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Nov 11 May 12 Nov 12 May 13 Nov 13 May 14 Nov 14 May 15 Nov 15

Indonesia - Commodity Prices

Indonesian Coal HBA Tapis Oil Crude Palm Oil (rhs)

- 9 -

THB: Manufacturing slowdown weighs Foreign selling of THB bonds in line with EM retreat


Investment slowdown reinforced by weak manufacturing


Real export contraction has dragged THB lower


Interim THB rebound dependent on China


• Thailand continues to face downward pressures on growth, with exports contracting on global demand slack while investment remains lacklustre given uncertainty in the outlook for manufacturing.

• Q3 growth was supported by consumption and government spending, but it was not strong enough to offset poor external demand, leading Bank of Thailand to cut its growth forecasts to 2.7% (prior: 3.0%) and 3.7% (prior: 4.1%) for 2015 and 2016 respectively.

• The Bank also judged that disinflationary risks are low, and left its 2015 core inflation forecast unchanged. Thus, it appears that further monetary easing might not be forthcoming, particularly given the Bank’s emphasis on maintaining financial stability.

• While there are signs of stabilization in China, which has already supported a recovery in risks assets and prompted inflows into Thai equities, we think the outlook for THB remains challenging with the Fed set to hike interest rates in December.

• Elevated household debt and persistently weak external demand conditions suggest that the Bank of Thailand might not be able to follow through on Fed rate hikes, resulting in a policy divergence that would underpin USD/THB strength.

• Risks of further ECB easing are also a concern as it could lead to increased competitive pressures on Thailand’s manufacturing exports, particularly for the auto and electronics industries.

• We expect USD/THB to stay buoyed towards 37 heading in Q1 2016, before a more significant external demand recovery helps THB to recoup losses in 2H.

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5.0

10.0

15.0


Thailand - GDP (2q/2q saar)


Net exports GDP 2q/2q saar

-15

-10

-5

0

5

10

15

20

25


Thailand - Private Investment Index

Private Investment Index (6m/6m saar)

Construction Subindex

Real domestic machinery sales sub-index

29.0

30.0

31.0

32.0

33.0

34.0

35.0

36.0-15

-13

-11

-9

-7

-5

-3

-1

1

3

5


Thailand - Real Exports vs THB

Real Exports (6m/6m saar) USD/THB (rhs, month avg)

30

31

32

33

34

35

36

371200

1250

1300

1350

1400

1450

1500

1550

1600

1650

1700

Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15

Thailand - SET Index vs USD/THB

SET Index USD/THB (rhs, inverted)

- 10 -

PHP: Remittances concern Wider trade deficit reflects region-wide export slowdown

Sources: IMF, Mizuho Bank Singapore Treasury

High implied yields suggest abating capital inflows


Non-electronics manufacturing poses key drag


Diminished remittances growth pose concerns


• While the Philippines is the best placed in ASEAN4 against a China-led slowdown, and also most leveraged to the US recovery, its trade deficit is also not immune against the region-wide trade slowdown.

• Notably, the trade deficit has widened in recent months despite benefitting from lower oil prices, with non-electronics manufacturing exports facing heavy downside pressures.

• While the Philippines have traditionally been more dependent on domestic consumption

than exports for growth, slowing remittances growth has clouded the consumption outlook as well, apart from being less supportive for the current account.

• On a 3m average basis, YoY remittance growth has slipped to its slowest pace since

2003, underperforming even the Global Financial Crisis period in 2009.

• A part of the decline is seemingly related to the termination of remittance businesses by banks that are seeking to comply with Financial Action Task Force’s anti-money laundering guidelines. However, the broader trend of a slowdown is still apparent.

• NDF implied yields continue to hover near recent highs with the 1Y yield above the

SDA rate, suggesting that foreign inflows have yet to return in a significant way. • With risks of outflow pressures building into Q1 next year on top of a remittance

slowdown, we expect USD/PHP to stay elevated, targeting the 47.5 level in Q1 2015.

-15

-10

-5

0

5

10

15

-20

-15

-10

-5

0

5

10

15

20


USD bn%

Philippines - Trade Developments

Trade Balance 6m saar (rhs) Exports 6m/6m saar

Imports 6m/6m saar

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

36

38

40

42

44

46

48

Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15

USD/PHP vs PHP 1Y NDF Implied Rate

USD/PHP PHP 1Y NDF-implied rate (rhs)

Overnight call rate (rhs, %)

-20

-10

0

10

20

30


Philippines - Exports (y/y 3mma)

Agro Mineral

Electronics Non-electronics manufacturing

Others Exports y/y 3mma

0

2

4

6

8

10

12

14

16

Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15

Philippines - Remittances Growth (y/y)

BoP - Secondary Income (y/y, 3mma)

Overseas Remittances (y/y, 3mma)

- 11 -

VND: 2-multuous

• To be sure, the 4.8%VND catch-down with other Asian FX this year has not been excessive (given 6.2% drop in SGD) though the step-nature ups risks.

• So VND moves may be “2-multuous” with the SBV set to exploit 2% devaluation limits perhaps two more times early-2016; USD/VND poised towards 23,500.

• A combination of three rounds of 1% devaluation and band widening has facilitated VND easing; which was seen necessary to avoid unnecessary internal devaluation.

• On that note, if Wider Asian currencies were to slip further in the context of Fed hike and China risks, the SBV may be inclined to align the VND accordingly.

• But at stake is credibility associated with the VND anchor based in earlier assurances of no more than 2%devaluation; this is however may be less of a constraint.

• For one, quick successions of devaluation are no less damaging than a 2% one-off devaluation; and front-loading devaluation is backed by widening trade deficit.

• And so, with the C/A set to slump further, and pressures on FX reserves likely to mount, it makes less sense to defend VND at current levels if other AXJ soften as well.

• What’s more, with inflation set to bottom as fuel deflation peters out, scope for currency devaluation also decline substantially. So we think devaluation moves will be done by H1.

• USD funding pressures could also be a concern in the banking sector, and to this end, a weaker VND may be harder to avoid; and could eventually support FDI/capital injection.

• But for now the tumultuous currency moves could inevitably chip away at confidence.

(10)

(8)

(6)

(4)

(2)

0

2

4

6

(10)

(8)

(6)

(4)

(2)

0

2

4

6

06 07 08 09 10 11 12 13 14 15

Deterioration in Net Exports reveal Pressures on th e C/A and consequent pressures on VND ($bn; Qtrly)

C/A (LHS)

Net Exports (3m Rolling RHS)

Sources: CEIC, Mizuho Bank - Singapore Treasury Div.

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

06 07 08 09 10 11 12 13 14 15

Tight Foreign Currency (USD) Supply and FX reserve pressures justify pre-emptive VND devaluation

Ratio of FC to LC Deposits (%)

Proxy* of overall FC liquidty to LC liquidity (%)

Sources: CEIC, Mizuho Bank - Singapore Treasury Div.

* Adjusted for money multiplier effects, calculated using applicable reserve requirements.

Corresponds to periods of VND devlauations as deposits (both LC and FC) are all stated in VND.

Increased spread between USD and VND reserve requirement (RR) triggered sharp drop in USD liquidity vis-a-vis VND liquidity.

- 12 -

AUD: Seeing Red (Metal?)

• Whether fresh copper (and iron ore) price slump will trigger lagged knock down of AUD into the red is now the pertinent question; and China holds part of the answer.

• Clearly, bearish price action in commodities, especially copper, in November highlights mounting risks that “defiant” (albeit modest) AUD gains may reverse abruptly.

• But this divergence is not unjustified. First, to the extent that China’s credit slowdown in Oct disproportionately inflicted pain on Copper, AUD need not follow suit entirely.

• Second, the RBA has been quite clear that scope to cut rates from record low 2.00% need not be exploited, and robust jobs data have validated this default “neutral” (rather than explicitly dovish) stand.

• What’s more, the RBA has alluded to AUD correction helping to re-balance the economy, which signals that AUD is not deemed to be over-valued.

• Finally, EUR funding currency proposition alongside more dovish RBNZ has souped-up AUD carry trades on the crosses; this is also buoying the AUD.

• Nonetheless, we think downside risks from China, commodities and Fed will continue to keep sub-0.68 tests on the radar near-term (stronger support at 0.65).

• It will necessarily take a more robust bottoming in China, which durably places a floor (and perhaps revive modest recovery) in commodities for sustained AUD traction.

• Moreover, way bet as dis-inflation fades into H2-2016 against China stimulus effects, we expect that RBA normalization coming into view could see 0.75-0.78 range (coming into view in late-2016/early-2017.

• So further out, AUD is expected to bounce to the firmer side of 0.73-0.78 range later in 2016, partly retracing the steep plunge from late-2014.

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

40

42

44

46

48

50

52

54

56

58

60

08 09 10 11 12 13 14 15

Whether Copper is more prescient than China's Mfg PMI is the key question amid Copper-PMI divrgence. AUD Risks Noted!

HSBC/Caixin Mfg PMI

"Official" Mfg PMI

Copper Prices (RHS US$/Metric Ton)

Sources: Bloomberg, Mizuho Bank

0.6

0.7

0.8

0.9

1.0

1.1

1.2

4000

5000

6000

7000

8000

9000

10000

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

Fresh pressures on Copper prices ; highlight AUD slippage risks if "carry" and RBA rate hold impact dissipate

Copper AUD

Sources: Bloomberg, Mizuho Bank Singapore Treasury Div.

-10.4

-5.6

-9.9

1.4

(10)

(5)

0

5 Month to date change in commodity and AUD suggest some divergence (% chg; end-Oct to 20-Nov 2015)

(40)

(20)

0

20

40

60

(40)

(20)

0

20

40

60

08 09 10 11 12 13 14 15

Improvement in employment since late-2014 diminishe s Case or Urgency for Policy Easing at the margin

Full-time Emp. Chg ('000s, 3mma) Part-time Emp Chg ('000s, 3mma)

Emp. Chg. (000's; 3mma; LHS)


3

4

5

6

70

1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15

Easing jobless rate and fading energy dis-inflatoin to shift RBA towards normalizatoin by late 2016

HeadlineTrimmed MeanUnemployment (inverted scale; RHS)


- 13 -

KRW: Prolonged external headwinds

Q3 GDP lifted by investment even as net exports weigh


Increased spending on construction and facilities


China has been a drag on Korean exports since Q1 2015


Narrower yield differential supports USD/KRW buoyancy


• Korea’s growth momentum has been improving on the back of a recovery in domestic demand, but net exports remain a negative for growth.

• Investment rose at a remarkable pace, driven by robust spending on construction and facilities. This possibly reflects the boost from a cumulative 50bps of rate cuts since April this year.

• Consumption growth was also steady in Q3, suggesting that any negative impact on consumer sentiment from MERS has been quite small.

• However, net exports continue to subtract from growth, with exports to China contracting for three quarters already even as exports to US and other countries appear to stabilize.

• With Korean growth likely to settle on a lower trend alongside a structural softening in Chinese industrial demand, we expect slippage in USD/KRW to be limited for now until a sharper improvement in external demand comes through.

• Furthermore, with Korean export mix being similar to Eurozone’s mix of high technology goods, prolonged EUR weakness from additional ECB QE could also pose structural headwinds to the won.

• Overall, we expect Bank of Korea to maintain its accommodative stance despite an imminent Fed rate hike, which should support USD/KRW towards the 1200 mark by Q1 2015.

-6

-4

-2

0

2

4

6

Mar

12

Jun

12

Sep

12

Dec

12

Mar

13

Jun

13

Sep

13

Dec

13

Mar

14

Jun

14

Sep

14

Dec

14

Mar

15

Jun

15

Sep

15

Korea - GDP 2q/2q saar


Stocks Net Exports GDP 2q/2q saar

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0


Korea - Investment (y/y)

Construction Facilities

Intellectual Property Investment y/y

-20

-10

0

10

20

Sep

12

Dec

12

Mar

13

Jun

13

Sep

13

Dec

13

Mar

14

Jun

14

Sep

14

Dec

14

Mar

15

Jun

15

Sep

15

Korea - Exports by Country (q/q saar)

China Japan USA

Asia ex-China/Japan Europe Others

Exports (q/q saar)

1000

1020

1040

1060

1080

1100

1120

1140

1160

1180

12000.40

0.90

1.40

1.90

2.40

2.90


KRW-USD 2y yield differential vs USD/KRW

KRW-USD 2Y yield differential USD/KRW (rhs, inverted)

- 14 -

FX Positioning & Flows Figure 1. Non-commercial longs in EUR

Sources: CFTC, Bloomberg, Mizuho Bank Singapore Treasury

Figure 2. Non-commercial longs in JPY


Figure 3. Non-commercial longs in AUD


Figure 4. Non-commercial longs in USD


Figure 5. India - Foreign equity inflows

Sources: SEBI, Bloomberg, Mizuho Bank Singapore Treasury

Figure 6. Indonesia - Foreign equity inflows

Sources: JSE, Bloomberg, Mizuho Bank Singapore Treasury

Figure 7. Thailand - Foreign equity inflows

Sources: SET, Bloomberg, Mizuho Bank Singapore Treasury

Figure 8. Korea - Foreign equity inflows

Sources: Korea Exchange, Bloomberg, Mizuho Bank Singapore Treasury

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

-40

-30

-20

-10

0

10

20


Non-commercial longs (USD bn) EUR/USD (rhs)

90

95

100

105

110

115

120

125

130-25

-20

-15

-10

-5

0


Non-commercial longs (USD bn) USD/JPY (rhs, inverted)

0.68

0.73

0.78

0.83

0.88

0.93

0.98

1.03

1.08

-12

-9

-6

-3

0

3

6

9


Non-commercial longs (USD bn) AUD/USD (rhs)

70

75

80

85

90

95

100

105

-20

-10

0

10

20

30

40

50

60


Non-commercial longs (USD bn) DXY (rhs)

56

58

60

62

64

66

68

70-60

-40

-20

0

20

40

60


Foreign equity inflows (20dma, ann.) USD/INR (rhs, inverted)

9000

10000

11000

12000

13000

14000

15000-40

-30

-20

-10

0

10

20

30


Foreign equity inflows (20dma, ann.) USD/IDR (rhs, inverted)

30.0

31.0

32.0

33.0

34.0

35.0

36.0

37.0

38.0-30

-25

-20

-15

-10

-5

0

5

10


Foreign equity inflows (20dma, ann.) USD/THB (rhs, inverted)

950

1000

1050

1100

1150

1200

1250-120

-90

-60

-30

0

30

60

90

120


US

D b

n

Foreign equity inflows (20dma, ann.) USD/KRW (rhs, inverted)

- 15 -

Currency Forecast Ranges USD Crosses

JPY Crosses

Dec 15 Mar 16 Jun 16 Sep 16 Dec 16

USD/JPY115 - 125

(122)

115 - 125

(122)

114 - 124

(120)

113 - 123

(118)

112 - 122

(116)

EUR/USD1.06 - 1.15

(1.11)

1.05 - 1.14

(1.10)

1.06 - 1.16

(1.12)

1.08 - 1.18

(1.15)

1.09 - 1.20

(1.16)

USD/CNY6.31 - 6.55

(6.43)

6.33 - 6.57

(6.45)

6.25 - 6.47

(6.36)

6.19 - 6.41

(6.30)

6.14 - 6.36

(6.25)

USD/INR64.1 - 68.9

(66.5)

64.4 - 69.2

(66.8)

64.6 - 69.4

(67.0)

60.7 - 67.0

(63.0)

60.3 - 64.7

(62.5)

USD/KRW1120 - 1240

(1,190)

1150 - 1250

(1,200)

1120 - 1220

(1,170)

1090 - 1190

(1,140)

1060 - 1160

(1,110)

USD/SGD1.38 - 1.46

(1.43)

1.39 - 1.47

(1.43)

1.35 - 1.43

(1.38)

1.31 - 1.38

(1.34)

1.30 - 1.36

(1.33)

USD/IDR13400 - 14900

(14,200)

13800 - 15200

(14,500)

13300 - 14700

(14,000)

13100 - 14400

(13,750)

12800 - 14200

(13,500)

USD/MYR4.12 - 4.60

(4.40)

4.20 - 4.60

(4.40)

3.96 - 4.40

(4.15)

3.82 - 4.18

(4.00)

3.72 - 4.08

(3.90)

USD/PHP45.7 - 48.7

(47.5)

46.3 - 48.7

(47.5)

45.4 - 47.6

(46.5)

44.6 - 46.8

(45.7)

43.8 - 46.0

(44.9)

USD/THB35.2 - 37.5

(36.5)

36.0 - 38.0

(37.0)

35.5 - 37.5

(36.5)

35.0 - 37.0

(36.0)

34.5 - 36.5

(35.5)

USD/VND22200 - 22700

(22,550)

22600 - 23100

(23,000)

22900 - 23100

(23,000)

22900 - 23100

(23,000)

22900 - 23100

(23,000)

AUD/USD0.67 - 0.74

(0.70)

0.65 - 0.71

(0.68)

0.68 - 0.77

(0.74)

0.72 - 0.80

(0.76)

0.72 - 0.80

(0.76)

Dec 15 Mar 16 Jun 16 Sep 16 Dec 16

USD/JPY115 - 125

(122)

115 - 125

(122)

114 - 124

(120)

113 - 123

(118)

112 - 122

(116)

EUR/JPY130 - 136

(135)

128 - 135

(134)

129 - 138

(134)

130 - 140

(136)

131 - 141

(135)

JPY/CNY5.03 - 5.51

(5.27)

5.05 - 5.52

(5.29)

5.06 - 5.54

(5.30)

5.10 - 5.58

(5.34)

5.15 - 5.63

(5.39)

JPY/INR0.52 - 0.57

(0.55)

0.52 - 0.57

(0.55)

0.53 - 0.59

(0.56)

0.51 - 0.56

(0.53)

0.51 - 0.56

(0.54)

JPY/KRW9.32 - 10.19

(9.75)

9.40 - 10.27

(9.84)

9.32 - 10.18

(9.75)

9.23 - 10.09

(9.66)

9.14 - 9.99

(9.57)

JPY/SGD1.13 - 1.21

(1.17)

1.13 - 1.21

(1.17)

1.11 - 1.19

(1.15)

1.10 - 1.18

(1.14)

1.11 - 1.19

(1.15)

JPY/IDR110 - 122

(116)

113 - 125

(119)

111 - 122

(117)

111 - 122

(117)

111 - 122

(116)

JPY/MYR3.44 - 3.76

(3.60)

3.45 - 3.76

(3.61)

3.31 - 3.61

(3.46)

3.24 - 3.54

(3.39)

3.21 - 3.51

(3.36)

JPY/PHP0.37 - 0.41

(0.39)

0.37 - 0.41

(0.39)

0.37 - 0.40

(0.39)

0.37 - 0.40

(0.39)

0.37 - 0.40

(0.39)

JPY/THB0.29 - 0.31

(0.30)

0.29 - 0.32

(0.30)

0.29 - 0.32

(0.30)

0.29 - 0.32

(0.31)

0.29 - 0.32

(0.31)

JPY/VND178 - 192

(185)

181 - 196

(189)

184 - 199

(192)

187 - 202

(195)

191 - 206

(198)

AUD/JPY81 - 90

(85)

79 - 87

(83)

83 - 93

(88)

85 - 94

(90)

84 - 93

(88)

Sources： Reuters, Mizuho Bank Singapore Treasury Division forecasts

- 16 -

Growth & Inflation Tables Key Economic Forecasts

Central Bank Policy Outlook

FX Deposit and Forward-Implied Rates

GDP YoY CPI CA (% GDP) GDP YoY CPI CA (% GDP) GDP YoY CPI C/A (% GDP) GDP YoY CPI C/A (% GDP)

United States 2.2 1.5 -2.4 2.4 1.6 -2.4 2.2 0.8 -2.1 2.7 1.9 -2.2

Eurozone -0.4 1.3 2.2 0.8 0.4 2.3 1.4 0.1 2.5 1.7 1.2 2.4

Japan 1.6 0.4 0.7 -0.1 2.7 0.5 1.2 0.9 1.5 1.5 1.3 1.5

ASIA (ex-Japan) 6.1 4.2 1.7 6.0 4.2 1.7 6.2 2.9 2.0 7.0 3.5 1.8

ASEAN-6 5.1 4.3 2.1 4.5 4.4 2.2 5.2 3.4 1.9 6.1 4.4 1.9

China 7.7 2.6 1.9 7.4 2.0 2.1 7.1 1.5 2.6 7.2 2.0 2.2

India 4.7 10.1 -2.8 5.3 10.4 -1.6 5.5 5.4 -1.3 6.6 5.9 -1.9

Korea 3.0 1.3 6.7 3.3 1.3 6.3 2.6 0.8 6.8 3.5 2.1 6.5

Singapore 3.9 2.4 18.4 2.9 1.0 19.0 2.6 0.0 19.0 2.9 1.7 19.0

Malaysia 4.7 2.0 3.8 6.0 3.2 4.6 4.7 2.2 3.2 5.2 2.6 4.0

Indonesia 5.8 6.4 -3.3 5.0 6.4 -3.0 4.8 6.5 -2.9 5.1 5.0 -2.8

Thailand 2.9 2.2 -0.6 0.7 1.9 3.5 2.9 0.1 4.0 4.1 2.8 3.0

Phil ippines 7.2 2.9 3.5 6.1 4.2 4.4 6.3 2.1 4.2 6.4 3.1 3.7

Vietnam 5.4 6.6 5.6 6.0 4.1 4.2 6.4 1.2 3.5 6.6 4.5 3.2

Australia 2.1 2.5 -3.3 2.7 2.5 -2.8 2.8 1.9 -2.8 2.9 2.1 -2.0

2013 2014 2015

Note: Asia (ex Japan) includes China, India, South Korea, Singapore, Hong Kong, Taiwan, Malaysia, Indonesia, Thailand, Philippines, Vietnam

Country

2016

2014

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

China PBoC 5.60 1-Yr Lending Rate 5.35 4.85 4.60 4.35 4.00 4.00 4.00 4.00 4.00 4.00

India RBI 8.00 Repo Rate 7.50 7.25 6.75 6.75 6.75 6.75 7.00 6.75 6.50 6.50

Korea BoK 2.00 Base rate 1.75 1.50 1.50 1.50 1.50 1.50 2.00 2.00 2.25 2.25

Singapore MAS^* Status Quo S$ NEER

Slope

Reduction* Status Quo

Malaysia BNM 3.25 O/N Pol icy Rate 3.25 3.25 3.25 3.25 3.25 3.50 3.50 3.50 3.50 3.50

Indonesia BI 7.75 Benchmark Rate 7.50 7.50 7.50 7.50 7.50 7.50 7.00 7.00 7.00 7.00

Thai land BoT 2.00 1-Day repurchase rate 1.75 1.50 1.50 1.50 1.50 1.50 1.75 2.00 2.25 2.50

Phi lippines BSP 4.00 Reverse repurchase rate 4.00 4.00 4.00 4.00 4.00 4.00 4.25 4.25 4.25 4.25

Vietnam SBV 6.50 Refinancing Rate 6.50 6.00 5.50 5.50 5.50 5.50 5.50 6.00 6.00 6.00

Australia RBA 2.50 O/N Cash Rate 2.25 2.00 2.00 2.00 2.00 2.00 2.25 2.25 2.50 2.50

* In an off-cycle meeting on 28th Jan, the MAS slightly reduced the gradient of the slope and has kept policy at the April meeting.

Country

2017

Central Bank

Re-instate modest and

gradual appreciation

Unlike other regional central banks, the MAS conducts monetary pol icy via FX. Specifical ly i t adopts a trade-weighted appreciation of the SGD at a "modest and

gradual" (estimated to be 2% per annum) pace as the default pol icy.

Status Quo

Policy Rate

2015 2016

Flattened slope Status quo

As of Spot

24 Nov 15 Deposit Fwd-Implied Deposit Fwd-Implied Deposit Fwd-Implied

USD 0.49 0.41 1.30

JPY 123 0.06 0.04 -0.07 -0.55 0.07 0.04

EUR 1.06 -0.18 -0.25 -0.07 -0.65 0.05 0.00

AUD 0.72 2.43 2.73 2.74 2.42 2.71 2.96

CNH 6.43 4.00 4.21 3.95 4.18 3.80 4.15

INR 66.4 7.00 7.18 7.30 7.10 7.60 7.81

KRW 1150 1.55 5.48 1.60 2.75 1.65 2.07

SGD 1.41 0.84 1.67 0.97 1.68 1.16 2.25

IDR 13700 8.20 8.23 9.25 9.42 9.75 10.89

MYR 4.26 3.35 3.53 3.71 2.69 3.87 3.08

PHP 47.1 2.41 2.95 2.41 2.67 2.93 3.44

THB 35.8 1.51 1.68 1.58 2.10 1.98 3.15

*Deposit rate is mid of bid/offer rates **Fwd-implied rates derived from FX forwards and USD deposit rates

3M 1Y1M

Sources：CEIC, Bloomberg, Reuters, International Monetary Fund (IMF), Mizuho Bank Singapore Treasury Division forecasts

- 17 -

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