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History Shows Asian Currencies Can Weather Steeper Yield Curve
Asian currencies may be able to stave off depreciation pressures from a steeper U.S. yield curve, if history is any guide. While the advance in Treasury 10-year yields above 1% this month has raised concern that this will choke off demand for emerging-market assets, previous episodes in 2013 and 2018 show the region’s exchange rates are more vulnerable to periods of an increasing federal funds rate and a flattening curve. The Bloomberg JPMorgan Asia Dollar Index, which tracks 10 regional currencies, fell 4.6% to a trough from a peak in 2013, as the U.S. yield curve steepened by around 100 basis points. A prolonged ... (full story)