Macro Insights Weekly - FX storm brewing

13 May 2024


  • Without much rise in volatility, global currencies have undergone large movements in recent years. Political pressure from the US could push up volatility.
  • DM and Asian EM FX have corrected, on average, by 10-12% against the USD, since 2022.
  • Most striking is the yen's 41% correction in two and a half years.
  • There are some economic considerations for the Japanese authorities to push for a stronger yen. 
  • But we don't think they are compelling enough to push them toward vigorous intervention.
  • US policymakers, convinced of USD's overvaluation, may pusj for action. Expect volatility.