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Greenback to strengthen against emerging market currencies - Manulife

22/09/2022 03:18 PM

KUALA LUMPUR, Sept 22 (Bernama) -- The US dollar will continue to serve its role as a safe-haven asset for as long as monetary policy uncertainties are prevalent across developed markets, according to Manulife Investment Management.

Head of asset allocation for Asia Luke Browne said the greenback has remained strong and has not been affected by emerging market currencies.

“For a shorter term outlook, this is going to continue for the remaining of this year.

“This would make the US dollar attractive as an investment and that does not affect other investments or currencies, particularly in emerging markets,” he said at Manulife’s 2022 fourth quarter investment outlook virtual media briefing today.

The greenback reached a two-decade high after the United States central bank delivered a steep interest rate hike.

On Wednesday, the Federal Reserve delivered a third consecutive 75-basis-point hike this year, bringing the federal funds rate to a new range of three per cent to 3.25 per cent, in an aggressive move to fight inflation.

Meanwhile, Browne stated that inflation may prove sticky at elevated levels for longer periods with tight labour markets, supply chain disruptions, and energy and commodity-supply shortages remaining untamed.

However, he said some possibility of respite may emerge as stronger US dollar dynamics could be starting to work their way into import prices, excluding volatile food and energy prices.

“Concerns about economic growth are rising and we expect to see a recession in the Euro area, a weaker than expected economic recovery in Mainland China, and a material economic slowdown in the US,” he said.

Manulife head of macro strategy for Asia Sue Trinh said Malaysia is likely to be the beneficiary within the region from both the food and energy shock as well as potential liquidity shocks due to the country’s inflation volatility remaining modest.



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