Global foreign exchange market review and outlook: the hawks and doves of major central banks, the rise and fall of a strong dollar

For the foreign exchange market, 2022 can be described as magic.

This year, not only the foreign exchange market in the world has experienced a historic year, but the global stock market has lost trillions of dollars in market value, the bond market has been turbulent, currencies and commodities have plummeted, and the collapse of multiple cryptocurrency empires has left many investors unforgettable. .

However, if we look back on this year carefully, we will find that everything seems to be inseparable from the protagonist in the foreign exchange market - the US dollar.

Global markets are in turmoil as global inflation soars and the conflict between Russia and Ukraine erupts. And when the world's most influential central bank the Federal Reserve began to consider raising interest rates, the wind direction of the market changed suddenly, and the financial market staged a double killing of stocks and bonds, and the demand for hedging increased. The Fed's most aggressive pace of rate hikes in decades has made the U.S. dollar one of the most sought-after assets for safe-haven funds, the entire foreign exchange market, and even all capital markets.

In the foreign exchange market, the appreciation of the U.S. dollar led to continued pressure on most other currencies, and even caused Japan to take intervention measures to prevent excessive currency depreciation after 24 years. A strong U.S. dollar, coupled with recession expectations, has led to an extremely subdued year for most major currencies.

The Federal Reserve, which sang eagles all the way, made the dollar shine for most of the year. It was not until the end of the year that the Fed slowed down the pace of interest rate hikes, and the dollar showed signs of peaking. The depressed market began to look forward to a diametrically opposite picture in the coming year, looking forward to the arrival of the spring of non-US currencies.

2022 review

USD

In fact, due to the surge in inflation caused by the ultra-loose policy in 2021, it has become a market consensus early on that the Fed will start raising interest rates in 2022. Many Wall Street firms predicted at the beginning of the year that the dollar will continue its upward momentum in 2021 in the new year.

Just entering 2022, the United States announced a "breaking 7" CPI data, which continued to hit a new high since June 1982. This data also strengthened expectations for austerity policies. However, at that time, the dollar's gains were moderated as most of the market expected the Fed to keep the economy from tightening policy too much. Some analysts warned in their forecasts for 2022 that the dollar's gains will moderate. "Historically, the dollar has strengthened six months before the first U.S. rate hike, but there is a risk that the bond market is trying to price in a Fed policy error," said Arjun Vij, a portfolio manager at JPMorgan Asset Management.

But to the surprise of the market, the Fed raised interest rates more violently than before. In March, the Federal Reserve’s interest rate hike boots officially landed, and in the case of continuous record high inflation, it raised interest rates by 75 basis points four times in a row, step by step starting the most radical interest rate hike cycle in 40 years.

The Federal Reserve has raised interest rates by 425 basis points since the beginning of this year, and the federal funds interest rate has risen to the highest level in 15 years since 2007. The U.S. dollar index, which tracks the greenback against a basket of currencies in 2022, rose as much as 16% at one point, the biggest gain since 1985, but then fell back to end up around 8%.

Although in this round of global interest rate hike cycle, the Bank of England is the first major central bank to start tightening policy, followed by the Fed and other central banks. However, compared with the Fed's 425 basis points, the Bank of England has raised interest rates by only 325 basis points this year.

As the world's most important central bank, the Fed's aggressive tightening policy also affects the performance of all other assets. Judging from historical data, the contractionary monetary policy implemented by the Federal Reserve in response to high inflation will most likely put pressure on the global financial market, and this year’s plunge in risky assets, including US stocks and cryptocurrencies, just fulfills this historical law , only commodities were still able to record gains.

This year, The S&P 500 Index has entered a technical bear market for the first time since the outbreak of the epidemic in March 2020. It has rebounded many times and failed to get rid of the downward trend; Bitcoin, the world's largest cryptocurrency, has fallen by nearly 70%.

Although interest rate hikes are not the only factor leading to the plunge of risk assets, the plunge of these assets has increased the demand for safe-haven assets. Coupled with the fact that the aggressive interest rate hike has led to global economic recession expectations are heating up, many funds have poured into the US dollar. In addition to this, there is another factor that cannot be ignored this year, and that is the conflict between Russia and Ukraine. February 2 this yearOn the 4th, conflict broke out between Russia and Ukraine. The outbreak of war once detonated the gold market and became the primary place for safe-haven funds. However, the increase in interest rates has pushed up real interest rates, and gold, as a non-interest-bearing asset, is no longer attractive.

Conversely, the Russia-Ukraine conflict has further boosted the dollar's appeal as a safe-haven currency. The energy crisisbrought by the Russia-Ukraine conflict has plunged the economies of many regions such as Europe into a quagmire. At the same time, it has also promoted a further surge in domestic inflation in the United States, making the Fed unable to stop raising interest rates. These factors have invisibly further promoted the US dollar. Kristen Macleod, co-head of global foreign exchange sales at Barclays, once pointed out: "The US dollar index is usually strong in two extreme situations: one is risk aversion, and the other is that the US economy is clearly outperforming Europe and Japan. Since the outbreak of the Russia-Ukraine conflict, the U.S. dollar index is benefiting from both.”

However, it can be seen from the trend chart that since September, the U.S. dollar has peaked in stages, falling 9% from its yearly high at one point. The dollar's fall was mainly due to the strengthening of US recession expectations, US inflation began to slow down, and Fed officials mentioned that they may slow down the pace of raising interest rates. The market even has expectations that the Federal Reserve will start cutting interest rates next year.

Although at the last interest rate decision meeting in December, Powell refuted the view that the Fed will reverse its tightening monetary policy stance next year, saying that raising interest rates is "still a way to go", but this did not let the dollar get rid of its weakness.

What is even more surprising is that on December 20, the Bank of Japan adjusted its yield curve control plan. Market analysts regard this adjustment as a "disguised interest rate hike" and predict that the central bank will soon cancel the negative interest rate policy. Therefore, the dollar-yen exchange rate plummeted that day, further suppressing the dollar index. Under the influence of various factors, the dollar's rally seems to be coming to an end.

euro

As mentioned above, due to the outbreak of the conflict between Russia and Ukraine, Europe, which is extremely dependent on Russian energy, has been hit hard.

The reason why the European Central Bank raises interest rates slower than the Fed is that due to the impact of the new crown epidemic, European governments are burdened with heavy fiscal deficits, and the energy crisis caused by the conflict between Russia and Ukraine has weakened the region’s economy, and it is easy to raise interest rates again. Triggered the European debt crisis. In the middle of this year, Italy's possible debt crisis even became a hot topic for a while. As a result, the euro has continued to lag behind the dollar as the European Central Bank has kept interest rates negative for most of this year to support the economy.

However, the energy crisis has caused the price of oil and gas to rise sharply, and European inflation is gradually getting out of control. At the same time, the depreciation of the euro has also exacerbated the economic difficulties. Under pressure, the European Central Bank started the interest rate hike cycle at 50 basis points. The European Central Bank has raised interest rates by a record 250 basis points this year.

But that hasn't stopped the euro from falling. First of all, the starting point and rate of interest rate hikes by the European Central Bank are lower than those of the Federal Reserve, and the interest rate gap between the two places continues to expand. Record natural gas prices have kept European households in fear of supply shortages throughout the winter, and a cost-of-living crisis has kept the European economy sluggish.

However, the dollar's fall has brought the euro back above parity against the dollar. And, despite a slowdown in inflation, the European Central Bank reiterated its hawkish stance at its final meeting of the year and warned of further aggressive rate hikes ahead. Money markets are betting the ECB deposit rate will rise to 3.5 percent by July next year, according to swaps tied to the date of the policy meeting. The implied peak has risen by 60 basis points since the ECB decided to raise rates to 2% on Dec. 15, leaving official borrowing costs at their highest level since 2001.

GBP

It is not only the euro that is approaching parity, but also the pound sterling. Although the Bank of England was the first major central bank to start tightening policy, the pound continued to depreciate against the dollar due to the weak economy and the divergence in the monetary policy rhythm of the UK and the US.

Although the pound has not fallen below parity like the euro, the exchange rate of the pound against the dollar has fallen by more than 9% this year, which is weaker than the euro. This is partly "attributed" to the British government. Britain, which is also in Europe, faces an energy crisis brought on by the conflict between Russia and Ukraine.Bills are rising and the UK government is rolling out supportive policies.

Since Brexit, the British economy has been in a "mess", and the former Truss has won support with slogans such as "committed to solving the energy crisis" and "low taxes, high growth", and succeeded in succeeding Johnson as Prime Minister of the United Kingdom in September. However, solving the UK's economic problems is not an easy task. Truss aggressively launched a "mini-budget" that includes multiple tax cuts, which made many in the market believe that this policy will bring about higher inflation and more serious deficits.

The British market was thus thrown into chaos: British government bonds were sold off sharply, and the pound plummeted. The Bank of England also had to buy bonds at this time to contain the market crisis. Although Truss gradually overturned the tax cut plan, this series of measures also made her the shortest-lived prime minister in 60 years.

Against the backdrop of continued turmoil in the financial environment, the British pound seems to have become an emerging market currency from a former foreign exchange "hegemon", and the UK's long-standing reputation in the international market has also continued to lose. Eva Sun Wai, fund manager at

M&G Investment Management, said: "Since the Brexit referendum, we have been looking at the pound as a 'hopeless' currency because it seems to be more affected by economic growth. If the world is Going into a period of very sharp policy tightening, with UK growth worse than elsewhere, would have serious implications for sterling."

The weak economy has also made the Bank of England more cautious about further rate hikes, with sterling a year ahead. prospects have become even more bleak.

Yen

However, if you want to say, there should be no other currency that can match the yen.

The yen once fell below the 150 mark in October, a new low since 1990. The yen has depreciated all the way this year, and the depreciation speed is very alarming. It has fallen by more than 30% within the year, and has depreciated by 50% in the past two years.

As a developed country and a currency favored by traditional safe-haven funds, the trend of the yen this year is really shocking. The most important factor leading to the depreciation of the yen is the policy differences between Japan and other central banks around the world. In many public speeches, Bank of Japan Governor Haruhiko Kuroda repeatedly stressed that the Bank of Japan must maintain loose policy to support the economy, which is in stark contrast to the global tightening wave, and the interest rate spread has widened accordingly.

Zhao Xueqing, a researcher at the Bank of China Research Institute, also talked about why the Bank of Japan insists on negative interest rates. There are three reasons: the outlook for the Japanese economy is hardly optimistic, the uncertainty about whether the deflation that Japan hopes to get rid of will end, and the financial pressure is worrying.

These factors make the Bank of Japan have been dealing with various speculations and bets in the market throughout the year. prevent further depreciation of the yen.

But seemingly under pressure, the Bank of Japan adjusted its yield curve control policy in late December. Although the Bank of Japan said in its policy statement that the move aims to "improve market operations and promote a smoother formation of the overall yield curve while maintaining an accommodative financial environment." But analysts, including Goldman Sachs, believe that this is a sign that the possibility of the bank abandoning the negative interest rate policy has increased, and that the Bank of Japan may abolish negative interest rates next. On the day when the

news was announced, the market fluctuated sharply, the yen continued to rise, and global bonds were sold off. Since then, the policy of the Bank of Japan has shifted, and the inflection point of the yen seems to have become the general consensus of the whole market.

Other currencies

During this historic year, Japan is not the only one that has intervened in the foreign exchange market. South Korea has also taken similar measures. Since South Korea is a processing and export-oriented economy, a stable local currency exchange rate is very important to the country. And a weaker won led to higher local food and shipping inflation, pushing South Korea's consumer price index to its highest level in more than two decades.

The weakening of the Korean won is still due to the Fed's most aggressive tightening policy since the early 1980s and the widening of interest rate differentials between the two countries. In addition, the slowdown in South Korea's exports and the reduction in foreign exchange reserves added to the market's pessimism on the Korean won.

But in November, the South Korean won seemed to "return to life" and its exchange rate against the US dollar rose by more than 9%, making it the best-performing currency in Asia that month and even in the fourth quarter. thisThe main reason is that the U.S. dollar fell back as the Fed’s interest rate hike slowed down, and most economic institutions believe that the strength of the U.S. dollar will gradually weaken, and other currencies are expected to rebound.

​​This year, the most important event is undoubtedly the conflict between Russia and Ukraine, so naturally the ruble has also become the focus of everyone. The outbreak of the Russia-Ukraine conflict caused the ruble to plummet instantly, but in less than a month, the exchange rate of the ruble against the US dollar achieved a V reversal , successfully recovering all the losses since the Russia-Ukraine conflict.

Member of the Chinese Academy of Social Sciences, former member of the Central Bank’s Monetary Policy CommitteeYu Yongding pointed out that the deep-seated reasons for the ruble’s “full blood revival” are sharp interest rate hikes, capital controls, and the requirement that “unfriendly countries” use rubles to buy oil natural gas. Under these magic weapons, the ruble is the strongest currency in the global foreign exchange market this year. The ruble has gained about 15 percent against the dollar so far this year.

can achieve appreciation under the siphon effect of the US dollar, in fact, there is also the Brazilian real. At the heart of the currency's appreciation is Brazil's persistent monetary tightening to curb inflation. Starting from March 17, 2021, the Central Bank of Brazil implemented a new round of interest rate hike policy. After 12 consecutive rate hikes, it raised the country’s benchmark interest rate to 13.75% on August 3 this year. The interest rate hike was 11.75 percentage points, which is the largest rate hike cycle since 1999.

such a radical rate hike has also received significant results. Brazil became the first developing country to see inflation peak. That has shifted the debate on interest rates from hikes to possible cuts next year. Brazilian financial market analysts believe that until May next year, Brazil will continue to maintain the current benchmark interest rate of 13.75%, and by the end of next year, the benchmark interest rate will be lowered to 11.75%.

Looking forward to 2023

As the "protagonist" of this year, the trend of the US dollar in 2023 is still concerned by the entire market. Because the strength of the U.S. dollar not only affects the foreign exchange market, but also affects the entire financial market such as the U.S. stock market. Therefore, there are many discussions in the market about the prediction of the U.S. dollar’s ​​trend.

In fact, there were signs as early as November that Wall Street's views on the dollar may be changing. In the futures market, speculative traders turned to a net short position on the dollar in November for the first time in 16 months, data from the U.S. Commodity Futures Trading Commission showed after a pullback in the consumer price index pushed the dollar index lower in October. for the first time since.

Therefore, the dollar peak theory began to surface. Analysts believe the Fed will start cutting interest rates next year as inflation peaks and the economy is under pressure from recession. Since July, the U.S. CPI has continued to slow down. At the same time, the Fed’s preferred inflation indicator core PCE price index also continued to fall in November. It has become a consensus expectation that U.S. inflation will continue to decline as economic growth slows down. Although Federal Reserve Chairman Powell clearly pointed out that interest rates may not be cut in 2023, according to the latest survey by MLIV Pulse, about 48% of respondents said that they expect the Fed to cut interest rates within 6-12 months after the last rate hike. That means the Fed could cut interest rates as early as late next year.

Wang Qing, chief macro analyst at Oriental Jincheng, said: "Under the general trend of the Federal Reserve slowing down the pace of interest rate hikes, the upward process of this round of the US dollar index has basically peaked."

includes JPMorgan Chase Asset Management and Morgan Stanley Former bulls, including , say the era of dollar strength is ending as cooling inflation prompts markets to reduce bets on further Fed tightening. Kerry Craig, a strategist at JPMorgan Assets in Melbourne said: "The market now has a better grasp of the direction of the Fed, the dollar is no longer the kind of one-way buying that we have seen this year.

Led by Andrew Sheets Analysts at Morgan Stanley predict that the dollar will peak in the fourth quarter and then fall by 2023, supporting emerging market assets. Paul Mackel, a strategist at HSBC Holdings, said the dollar may "fail" next year.

Deutsche Bank believes , the dollar's record highs can be attributed to: Europe's energy crisis, and the Federal Reserve's determination to curb high inflation. Between them, the existence of so many risks convinced global investors to seek refuge in the traditional safe haven of the dollar. But the GeorgeRisks reached a well-defined peak in November, which in turn set the stage for a sharp turn in the dollar, Saravelos said. The previously huge risk premium on the dollar now looks much less elevated, while speculative positioning has also turned neutral. The dollar's second-biggest rally since February 1985 is effectively over, said Kit Juckes, head of foreign exchange strategy at Societe Generale . “No matter how we glamorize the world, the Fed is slowly approaching the end of the rate-hike cycle,” Juckes said. “The rate hikes will get smaller and smaller, and eventually stop raising rates. That will be the end of the story.”

However, Opponents of the U.S. dollar peak theory still believe that the U.S. dollar is expected to continue to strengthen next year because of Powell's hawkish stance. Agnes Belaisch, European strategist at Barings Investment Institute, said the Fed remains focused on ensuring inflation is under control, which means rates may have to stay high for some time before the Fed starts cutting them, supporting dollar assets. "The Fed's job isn't done and long dollar positions still make sense," Belaisch said.

Although the current high point of US inflation has fallen, it is still a long way from the Fed's 2% target. The Federal Reserve, which is committed to fighting inflation, may therefore continue to maintain tightening policy. Moreover, the labor market is still hot, and the unemployment rate remains at historically low levels before the outbreak. The latest U.S. GDP growth rate for the third quarter also reached 3.2%, shaking off fears of a recession in the first half of the year. This made investors increasingly worried that the Federal Reserve may maintain higher interest rates for a longer period of time.

BlackRock chief fixed income strategist Scott Thiel believes that U.S. inflation will only slow to 3.50% by the end of 2023 due to persistent labor shortages, rising wages and falling inventories. That compares with a one-year CPI swap level of 2.38% and a 10-year U.S. Treasuries breakeven rate of 2.14%.

BlackRock expects the Fed to raise interest rates to 5% in the first half of 2023, when long-term inflation will stabilize at around 3%. Thiel believes that long-term structural shifts will keep inflation rising. That means there is currently no reason for the Fed to "not take a hawkish stance," he said. Christopher Rupkey, chief analyst at FWDBONDS in New York, said: "The U.S. economy is not as dying as the market thinks. The economy is not slowing down, upward pressure on prices may continue, and the Fed will therefore likely need to raise interest rates further in 2023."

Goldman Sachs even gave a more optimistic forecast, believing that the Federal Reserve will not cut interest rates in 2023 and the US economy will avoid recession. The bank's chief economist, Jan Hatzius, said a recession could be avoided because financial conditions and tighter monetary policy would constrain the labor market and dampen GDP growth, but not enough to trigger a recession. In turn, this will prevent the Fed from lowering interest rates during the year, since the absence of a recession will reduce the pressure to stimulate. “I think the hurdle for the Fed to cut rates will be relatively high in a non-recessionary environment with inflation still above target. Looking ahead to 2023, even if it raises rates, it will be 75 basis points more, similar to the Fed’s forecast, I I think the financial situation will be less of a drag."

Guotai Junan International Chief Economist Zhou Hao said that if the US economy's "recession" expectations fail, the dollar may still "return the king" and put pressure on global currencies again. "As the hegemon of the global currency, we cannot underestimate the resilience of the US dollar. Although 'recession' is the main line of market trading, the current mainstream view is that the recession of the US economy is 'moderate'. That is to say, the US economy still has a certain The probability is higher than expected,” Guotai Junan International said.

On the other hand, as the main factors pushing up the dollar, the energy crisis and the global economic recession are expected to continue to support the performance of the dollar. The conflict between Russia and Ukraine has not yet ended, and many regions, including Europe, are still unable to get rid of the energy crisis, making the global economy worse under the wave of austerity.

(IMF) Managing Director of the International Monetary FundKristalina Georgieva said at the 2022 Global Annual Meeting of the International Financial Forum (IFF) that the worldThe economy is slowing down. The IMF predicts that the global economic growth rate will be 2.7% in 2023, but there is a 25% probability that the actual growth rate will be lower than 2%.

Georgieva said that in 2023, at least one-third of the world's countries are expected to fall into recession. The Asia-Pacific region is in a relatively good situation, but it does face challenges from many unfavorable factors.

Georgieva explained that as many countries will continue to raise interest rates to fight inflation, fiscal policy will continue to tighten. High interest rates will cause yields to rise and currencies to depreciate across Asia. The conflict between Russia and Ukraine has seriously impacted the global energy and food markets, directly affecting the economic growth of Europe and weakening Europe's demand for imports from Asia. A

poll of 66 foreign exchange strategists in December showed the dollar would remain at current levels for the next year or so as many expected tightening by global central banks would hurt growth and boost the greenback again Safe haven appeal.

However, among these, the more general view is that the dollar will not maintain its strength throughout 2023, and the further time passes, the weaker the momentum of the dollar will be.

Mitsubishi UFJ recently issued a view that the dollar may appreciate in early 2023, but it will not last long. The U.S. dollar could strengthen again in the first quarter of 2023 if data show a strong U.S. labor market, but that won't last long, the agency said. Inflation is likely to ease in the coming months, but labor market conditions could keep the Fed's tightening going longer than markets expect. This may become one of the focuses of the market in the first quarter of next year. In our view, this could lead to renewed risk aversion, which would lead to renewed dollar strength. However, the dollar may start to fall in the second quarter as a weaker labor market eases concerns about wage inflation and bolsters the case for the Fed to cut interest rates in the fourth quarter.

On the contrary, most other non-US currencies will go out of the opposite trend with the US dollar.

First of all, in terms of the European region, CICC believes that in 2023, as the recession pressure facing the euro zone gradually emerges, especially the negative disturbance of the energy supply problem to the economy at the beginning of 2023 may further deepen the market's interest in the euro zone economy. In this context, the European Central Bank may also end the interest rate hike cycle earlier. It is expected that the overall rhythm of the euro will follow other non-US currencies to fall first and then rise. Specifically, in the first half of 2023, the signs of recession in the European economy may gradually become more obvious. Therefore, the European Central Bank may exit the current round of interest rate hike cycle earlier than the market currently expects, which will cause the euro to launch a round of correction against the US dollar. Since then, in the second half of the year, with the official start of the downward trend of the US dollar, the euro is expected to rebound against the US dollar at the end of the year.

Erste Group Bank pointed out that the differences in monetary policies between the United States and Europe will moderately boost the euro. The dollar has weakened sharply since November amid signs that the U.S. rate hike cycle is coming to an end, the bank said. As a result, the market has lost its imagination about the previously high valuation of the dollar. For the US and the Eurozone, the rate hike cycle is not over yet. This means that there is uncertainty about the final magnitude of future interest rate moves. The outlook for US interest rates is relatively easy to assess, while uncertainty in the euro area is high. We expect the Fed to raise interest rates by a further 50bps in the first months of next year, while the ECB will raise rates by a cumulative 100bps by May, implying a slight narrowing of interest rate differentials. The movement of the currency pair will be determined by corresponding speculation and therefore may be volatile. Ultimately, though, we expect only modest euro strength, which should be supported by stronger speculation of a US rate cut in the second half of 2023. Strategists at

Royal Bank of Canada and Bank of New York Mellon see the Bank of England taking a more cautious stance on further interest rate hikes, while the European Central Bank has reinforced rhetoric that more action is needed to curb inflation. The euro-sterling exchange rate is expected to continue to rise in the coming year. Strategists said it was a new key thematic trade based on monetary policy divergence. After the world's major central banks have raised interest rates sharply this year, traders are watching which central bank will be the first to make a change. Lee Hardman, currency strategist at MUFG, said continued interest rate hikes by the Federal Reserve and the European Central Bank have also increased the chances of a hard landing for the global economy, which would have a negative impact on riskier assets such as sterling. "I'm probably more bullish on EUR/GBPThe performance of other high-beta currencies in the country,” Hardman said.

In Asia, the yen and the Korean won are favored by most analysts. Stronger. The Canadian Imperial Bank of Commerce said the yen would rise against the Australian dollar and sterling as the Bank of Japan's December policy adjustment would help correct the yen's weakness. The bank's strategist Patrick Bennett said weak U.K. economic data and U.K. The central bank needs to tighten monetary policy, which is a poor combination for the pound. Also, rising global interest rates next year will weigh on global economic activity, which is a risk for the high-beta Aussie. U.S. core inflation remains Too high, will prompt the Fed to continue to raise interest rates in 2023. However, having said that, the market is forming a consensus that the Fed terminal interest rate will be close to 5%.

Societe Generale expects the Korean won to continue to outperform other Asian peers. Franklin Temple Sonal Desai, chief investment officer for fixed income at Deutsche Bank, said now is a good time to buy currencies that are "under extreme pressure" such as the yen and South Korean won. Weakness fuels volatility, and the won could fall to as low as 1,380 to the dollar again in the first quarter of next year. Choi said buying the won would be a "very good level" if it falls to the 1,350 level. He expects the won to Next year it will rebound to a level of 1,100 won per dollar, a level last seen in mid-2021. Also, the won could appreciate further if South Korea is included in the FTSE World Government Bond Index. South Korea's Finance Ministry expects the move to be announced as early as March 2023 and will attract as much as 90 trillion won ($68.6 billion) of foreign investment into South Korea.

Goldman analysts including Danny Suwanapruti, in USD The strong exchange rate against Asian currencies may have peaked, and said that in the next three to six months, when the Fed's interest rate path is clearer, the momentum of the dollar's continued strength will weaken. Goldman Sachs said in a research note that the bank Bullish on South Korean won, Singapore dollar and Indonesian rupiah, bearish on rupee, expects dollar to peak on gradual clarity on Fed's final interest rate.

Goldman Sachs says it is very bullish on South Korean won and Singapore dollar exchange rate movements. In Asian currency exchange rate high yield market , due to the improvement in the external position of the Indonesian currency and the record low holdings of overseas funds, the future changes in the Indonesian rupiah exchange rate will be "very constructive". In addition, Goldman Sachs also expects that the currency exchange rates of Malaysia, India and the Philippines will not be optimistic.