Extract from a recent ING EOY report about global currency vulnerabilities, as reported by Portfolio online financial journal:
“As we close the year and the rout in commodity markets extends, investors have quite a clear view of potential tail risks in 2016. At the top of these is a Chinese recession, followed by an EM debt crisis. Another highlighted risk is the surprise return of US inflation and the Fed being behind the curve,” ING said in its Monthly Economic Update on 10 December. ..In the chart below ING looked at the vulnerability of global currencies..
“Most vulnerable are naturally those most exposed to the China business cycle and those running large external deficits – should abrupt Fed tightening trigger a sudden stop of portfolio flows. The Brazilian Real and South Africa rand stand out under these metrics, while Korea’s and Australia’s trade dependence on China could also heap pressure on their currencies.
“Least vulnerable are those with the smallest trade exposure to China, such as many countries in the CEE, as well as the JPY. Despite its trade links to China, we think the JPY will prove the preferred safe haven of 2016, buoyed by its fast-improving current account surplus and its historically large Net International Investment Position,” ING said.
Based on a Portfolio.hu article Dec 14 2015.