HALISTER1: ECB Tapering Would Withdraw Liquidity From Asia, StanChart Says

ECB Tapering Would Withdraw Liquidity From Asia, StanChart Says

(Bloomberg) -- Any potential early tapering by ECB indicates withdrawal of liquidity which Asian currencies have been benefiting from, Standard Chartered Bank Asia FX strategist Eddie Cheung says.
  • Potential retrace would impact equity-driven currencies in Northeast Asia, while bond-flow driven currencies such as MYR would also be affected
  • Tapering would be a natural next step, but ECB decision would be data dependent, and would watch next meeting
  • Too early to price in ECB tapering potential as the central bank is still likely to extend QE
  • NOTE: KRW falls as much as 0.8% today, most since Sept 12, to 1117.10 per dollar; now down 0.6% at 1114.05
    • MYR declines as much as 0.5% today
    • ECB would gradually wind down bond purchases as QE approaches its end, Bloomberg reports, citing officials from the European central bank who declined to be identified
    • Officials didn’t exclude that QE could be extended past end-date of March 2017 at the full pace of 80 billion euros a month.
    • Next policy meeting scheduled for Oct. 20
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)
STAN LN (Standard Chartered PLC)

People
Eddie Cheung (Standard Chartered PLC)

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