Reserve Build-Up No Support For Asian FX -.....>

ASIA: Reserve Build-Up No Support For Asian FX

- While Asian central banks continue to accumulate reserves in an attempt to

prevent currency appreciation, MNI do not see this as a reason to be bullish on

Asian FX, given the potential for portfolio outflows to reverse amid rising U.S.

interest rates.

- Central bank reserve holdings across Asia continue to rise, with April seeing

new record reserve levels in countries including South Korea and Thailand. The

accumulation of reserves reflects the efforts on behalf of regional central

banks to keep their currencies weaker than they otherwise would be, which, in

isolation implies that there could be further upside for Asian FX.

- However, new highs in reserves have not prevented currency weakness in the

past and MNI do not expect them to do so this time around, for three main

reasons.

- MNI - For Full Story See Main Wire At 18:57 BST 05/08