Never mind the tensions with North Korea and China’s deleveraging drive, Asian currencies have emerged victorious in a Bloomberg survey of emerging market watchers.

India’s rupee and the Indonesian rupiah -- the region’s two highest-yielding currencies -- took first and third place in the poll, in which 18 investors, traders and strategists were asked to gauge the resilience of currencies when it comes to a suite of risk factors looming in the second half.

The worst performance among developing-market currencies last quarter isn’t holding back the Argentine peso: it came in second. At the other end of the ledger, Turkey’s lira, Russia’s ruble and the Mexican peso were seen as the most vulnerable.

“Asia is sort of distant from major external risks, from European politics to Middle East geopolitical risks, but Turkey and Russia are directly facing those issues,” said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo. Asia stands to benefit most from the global economic recovery, and “even China doesn’t pose much influence for now as concerns about downside risks to the economy have eased.”

So how does the rest of the emerging-market universe stack up in the face of a tightening Federal Reserve and President Donald Trump? Here are the survey results:

Respondents were asked to rank regions based on how their assets may perform in the second half.

The Fed’s interest-rate hikes have yet to trip up the emerging-market juggernaut, but investors aren’t likely to be complacent, especially with the potential for a global switch to tightening should the European Central Bank and Bank of Japan get on board.

From the Korean peninsula to the Middle East, the world isn’t short on geopolitical tension. Here’s how emerging-market currencies stack up in terms of perceived vulnerability:

Which currencies are more exposed to issues thrown up by the U.S. president? The survey isn’t good news for the Mexican peso, but respondents see the rupiah as comparatively insulated.

Britain voted to exit the European Union more than a year ago, but the outcome continues to ripple through markets, with the process of leaving the bloc likely to be a long and protracted negotiation. Elections in the region also loom this year.

The following companies responded to the survey: Aviva Investors, Ashmore Group Plc, Canadian Imperial Bank of Commerce, Dai-ichi Life Research Institute Inc., Daiwa SB Investments Ltd., Danske Bank A/S, DuPont Capital Management Corp., FPG Securities Co., Krung Thai Bank Pcl, Mitsubishi UFJ Kokusai Asset Management Co., Mizuho Bank Ltd., NBC Financial Markets Asia Ltd., Newfleet Asset Management, NN Investment Partners, SBI Securities Co., Standard Life Investments, Track.com and UBS Wealth Management

Source:
courtesy of BLOOMBERG

by Yumi Teso and Daisuke Sakai

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