UpdateRich Asians urged to buy US dollars as surge in region’s currencies start to fizzle

Money managers for Asia’s wealthy families are telling clients to buy US dollars as a rally this year in regional currencies begins to sputter.

Credit Suisse Group AG is advising its private-banking clients to bet the greenback will gain versus a basket of peers that includes the South Korean won, Taiwan dollar, Thai baht and Philippine peso. UBS Group AG said investors should buy the currency against the Singapore dollar and yen. Stamford Management Pte, which oversees about US$250 million for Asia’s rich, urged clients to buy the US dollar each time it falls below S$1.35.

The Monetary Authority of Singapore’s unexpected easing on April 14 has fueled speculation other policy makers, concerned about a worsening global economic outlook, will follow suit.

A gauge of 10 Asian currencies excluding the yen has fallen 0.1 per cent this month. The Bloomberg-JPMorgan Asia Dollar Index climbed 1.9 per cent in the first three months of the year, the first gain in seven quarters, as traders adjusted bets on the timing of US interest-rate increases.

“We see good opportunity now to hedge against US dollar strength after the strong rally in Asian currencies in the first quarter,” said Koon How Heng, senior foreign-exchange strategist at Credit Suisse’s private banking and wealth management unit in Singapore. “There are risks that other Asian central banks may follow up with some more easing in the second half if their respective growth outlooks deteriorate further.”

The prospect of renewed weakness in the Chinese yuan and two interest rate increases by the Federal Reserve in the second half of the year will boost the greenback, Heng said.