Currencies across Asia are set for a beating, buffeted by a combination of the G3 central banks, a stronger U.S. dollar and newly volatile Chinese yuan, HSBC said.
"It will be slim pickings in terms of which Asian currencies to like next year. Even the yuan will be predisposed to bouts of higher volatility, which could further upset the region's currencies," HSBC said in a note Thursday. "While we had expected most Asian currencies to trade on the back foot against the U.S. dollar, some are now even starting to underperform the euro."
Many of Asia's currencies have had a tough week since the Bank of Japan (BOJ) announced a fresh batch of stimulus, with the Singapore dollar shedding 1.5 percent against the U.S. dollar, the Thai baht losing 1.1 percent, the Malaysian ringgit dropping 2.2 percent and Indonesia's rupiah slipping 0.7 percent.
Not just the Fed
Currencies with sound external balances, such as the yuan, Korean won, Taiwan dollar and Singapore dollar, were expected to hold up better against the Federal Reserve's tapering of its asset purchases this year, HSBC said.