The RMB continues to outperform, and we think this trend has further to run, since mainland

China’s export-led economic growth is likely to be strong in 1Q – due to base effects, as well as

the COVID-19 resurgence globally. Moreover, it takes time for outflows to gather pace in

reaction to recent changes in cross-border capital flow policies. We expect the RMB to weaken

more broadly from the middle of the year.

The Asian higher yielding currencies tend to have more solid fundamentals and also lower

volatility compared to their peers in CEEMEA and LatAm. We favour the INR more than the

IDR and PHP. We suggest funding carry trades out of THB and TWD (NDF), but we need more

confidence in the US fiscal outlook first. With regards to the THB, we believe it is still too

early to position for a tourism recovery.