The debt impasse in Washington has sent investors fleeing for safety, selling down the U.S. dollar and buying into safe-haven assets like the Swiss franc and Japanese yen.
The Swiss franc is now at a record high versus the dollar while the yen is at a 4-month high. But HSBC is recommending investors look at other Asian currencies as safe-havens.
“We are short dollar (versus) Asia — we see Asia perhaps not as a haven of liquidity as the yen is, but really a haven of quality,” Daniel Hui, FX strategist at HSBC told CNBC Friday.
“Balance sheets in Asia are looking a lot better; the currency fundamentals are very good so we expect ongoing flows, ongoing of migration of capital into Asia.”
Hui recommends investors short the greenback against the Singapore dollar , the yuan , as well as the Korean won .
“We have liked Singapore for quite a while now. We see Singapore as a regional safe haven, a relative safe haven (and) it has been performing that way,” he explained.
Hui also likes the offshore yuan believing it will strengthen to 6.40 versus the greenback over the short-term and 6.30 by the first-quarter of 2012.
Hui expects the renminbi to become an eventual anchor for other Asian currencies. That would mean the Chinese currency would appreciate during intense risk-off periods and a flight to liquidity. (Watch the full interview here.)