— This is the script of CNBC's news report for China's CCTV on February 5, Thursday.
From Switzerland to Singapore, central banks around the world kept markets on their toes with unexpected policy moves January. Last month alone, central banks in India, Egypt, Peru, Denmark, Canada and Russia announced surprise interest rate cuts. This came alongside Switzerland's unanticipated decision to scrap its three-year-old cap on the franc and Singapore's off-cycle move to tweak its exchange rate policy in order to ease the rise of the local currency.
[AJAY KAPUR, Head of Asia-Pacific and Emerging Markets Strategy, Bank of America Merrill Lynch] "Central banks around the world are gonna surprise themselves with how much they are gonna ease. Its so bad its good, equity markets like paniccking central bankers."
The surge in the Swiss franc after that country's central bank surprisingly removed its peg to the euro last month was a windfall for the few hedge funds on the right side of that trade.
Hedge funds don't want to lose out on this next big score and they've identified their next big currency target.
Brian Kelly of BKCM is long the Danish crown on expectations Denmark's central bank will remove its peg to the euro as well to save the local economy from the ills that come with the ECB's quantitative easing plan launched in January and subsequent weak outlook for the currency.
"Typically, currency pegs break when the market forces central banks to act," said Kelly, who is long the Danish krone (or crown in English) and short the euro.
Hedge funds are in search of countries with diverging economies that want the soundness and stability, along with the investing flows, that come with a strong currency in a world where central bank after central bank (including China overnight) embark on a race to the bottom for their respective foreign exchange. Within Asia, central banks in China, Thailand, Korea, India, Indonesia and Singapore are the ones to watch, analysts note.
[SALLY AULD, Interest Rate Strategist, JP Morgan] "In the G10 space we're looking for rate cuts from Norway and Sweden, another rate cut from Canada. So you get the sense that at least in a decent part of the global economy there looks to be what looks like a sychronised easing cycle underway."
Economists say the surprises aren't going to stop there. However, what these currency wars do -- exporting deflation and undermining rival economies as a beggar-thy-neighbour strategy, might lead to a no-win situation.
I'm CNBC's Chen Qian, reporting from Singapore.