Developing nations’ oddball currencies have just enjoyed their best run since 1999. The Grim Reapers at Goldman are here to tell you the party like it’s 1999 theme is lame and inexorably over.
Sell short the won and the yen is their best and most salient advice.
“These are good levels to short Asian currencies, especially the won, baht, Taiwan dollar, yuan and ringgit,” said Trivedi, Goldman’s chief emerging-market macro strategist in London, in an interview. “There are very direct implications for emerging-market currencies in Asia from yuan moves. We forecast more weakness across this currency complex.”
Goldman predicts a 14 percent plunge in the yen to 130 per dollar in the next 12 months, a level last seen in 2002, and a 7.4 percent drop in the yuan to 7 versus the greenback, which would be the weakest since May 2008. The won will decline almost 12 percent from current levels to 1,300 in the period, according to Trivedi, who recommends shorting the Korean currency as the best way to position for the projected reversal in Asian exchange rates.
Also, to hell with the ringgit. This is a subtle way of saying risk off friendo, in my opinion.
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Good advice as always from the genius barbarians at Goldman Sachs.
As long as The United States remains ground zero for globalization our currency will reign supreme, crushing the dreams of everyone aboard the Asian Continent. Our stocked markets will continue upwards for no other reason than a worldwide desperate need to own American Dollars. Corporate Earnings will be annihilated and their stocks will trade higher. Multiples will become outrageous.
Years later, when multiples are still outrageous, inner-city tenements filled with fat, lazy, would-be terrorists will sport gold toilets and door knobs. Gold is now seen as the scarlet-letter of poverty, and all gangster rappers avoid it.
Donald Trump did become president and he fought hard against the hatred of gold, but he lost that battle. He won, however, the battle against CHYYYNA, which was a large scale nuclear war.
ICE Index down 4% YTD. Being long FXY is up YTD.