BUZZ-COMMENT-Prime time to invest in Asia's higher-yield currencies

Credit: REUTERS/THOMAS WHITE

With stimulus underpinning risky assets and China's yuan rallying, this may be a good time to buy Asia's higher-yield currencies.

Aug 26 (Reuters) - With stimulus underpinning risky assets and China's yuan rallying, this may be a good time to buy Asia's higher-yield currencies.

Where the yuan, goes most of Asia's popularly trade currencies usually follow .

Risky currencies are starting to attract thanks to enduring stock and commodity rallies born out of massive stimulus.

Bad news has proved to be good for risk and volatility is low, which suits carry trades.

The most attractive rates are India's 4%, one month vol around 5. Rates in Indonesia also 4%. One-month vol is a more lofty 10, but was almost 30 in March and around 6 pre-crisis.

China's main rate is 3.85%, vol around 4.5.

Philippines main rate is 2.25%; vol 4. Malaysia's main rate 1.75%, vol circa 6, as it was for years pre-crisis. Rates in Taiwan are 1.125%, vol 3.5.

Speculators have been buying all of these currencies but not much of them .

Carry trades will yield more if funded with any negative-yield currency. The Swiss franc tends to move little and Switzerland's rates are the lowest.

For more click on FXBUZ

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

((jeremy.boulton@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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