Where are Asian currencies heading?

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Asian currencies, which were set to appreciate in the medium term, have reversed. We examine this phenomenon and predict what may be awaiting Asian currencies.

Structure of forex markets

Huge global foreign exchange (forex) markets have a daily turnover of US$5.3tril, which is roughly 23 times the world GDP. The functioning of this market has its own dynamics that can drive the exchange rates of Asian currencies away from their fundamentals. This article will look at the structure of forex markets, based on the 2013 triennial survey of the Bank for International Settlements (BIS)1.

The forex market is a striking example of how finance has reversed its role, from serving the real economy to only serving its own purposes. In the past, it was driven by exporters and importers of goods and services.


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