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Mitul Kotecha, senior emerging markets strategist at TD Securities, notes that CNY has weakened by close to 7.5% since mid-April, dragging down most Asian currencies amid tariffs intensification and weaker growth.

Key Quotes

“Asian FX sensitivity to CNY increased from late last year, revealing that CNY gyrations are having a bigger impact on Asian FX.”

“We examine the impact on Asian FX of a hypothetical move in USDCNY to 7.50 by calculating their beta predicted moves.”

“The biggest casualties in Asia would be KRW, INR and TWD, where a further 3.8%, 3.3% and 1.9%, depreciation respectively versus USD would be likely. Other Asian currencies would also fall but to lesser degrees.”