De-dollarization is set to accelerate but still will be a long process

Special focus: Global de-dollarization will continue to accelerate, driven by underlying new geo-political and economic order. However, it will still be a long process and US dollar will remain dominant in foreseeable future. Comparatively, we expect more progress of ASEAN and Asia’s de-dollarization in payment area.

FX views: EM Asian currencies weakened against the US dollar last week, amid the background of a 0.3% rise in dollar index. KRW led regional currencies lower by depreciating more than 2% against the dollar, followed by PHP (-1.5%), IDR (-1.0%) and MYR (-0.8%).

Week in review: China’s Q1 GDP growth number was a bright spot with an above consensus 4.5%yoy, while March data was a mixed batch. March exports of couple Asian economies were weak, such as Indonesia, Malaysia, Singapore, Taiwan and South Korea.

Central bank monitor: PBOC kept its 1-year MLF rate unchanged at 2.75% on 17th April, and also held 1-year LPR and 5-year LPR unchanged at 3.65% and 4.30% respectively on 20th April; BI kept the 7-day reverse repurchase rate at 5.75% on 18th April.

Week ahead: Asian calendar features 1Q GDP and March IPn for Taiwan and South Korea, trade data for Thailand and inflation report for Singapore.

COUNTRIES SEEK ALTERNATIVES TO THE US DOLLAR

Sources: MUFG GMR