Most Asian central banks sold dollars in June in response to the Fed's hawkish shock (Nomura)
Nomura released an estimated report on foreign exchange intervention by central banks in Asia excluding Japan (AeJ).
Nomura released an estimated report on foreign exchange intervention by central banks in Asia excluding Japan (AeJ). Core conclusion: After the Federal Reserve issued a hawkish signal at its June meeting, most AeJ central banks sold U.S. dollars in June to hedge against the pressure of strengthening the U.S. dollar. However, there are obvious differences in the intervention situations: the Bank of India intervened significantly (-8.4%), while Indonesia (-17.4%), the Philippines (-7.7%), and South Korea (-7.1%) all intervened significantly. Thailand, Taiwan, and Mainland China operate in relatively mild directions. The market's understanding of the intervention behavior of Asian countries is not precise enough, and it ignores the differentiated operations (such as some selling, some even increasing holdings) taken by different countries due to differences in their own inflation, foreign exchange reserve adequacy, etc. One sentence conclusion: The dollar operations of Asian central banks in June were not unified "defense", but "differentiated intervention" based on each country's own situation. The intervention intensity of India and Indonesia was much greater than that of China and Taiwan. Positive/negative: There is short-term positive support for emerging market foreign exchange reserves and exchange rate stability (reduce volatility). It is negative for the overall USD strength against Asian currencies. Price in situation: The market has seen Asian foreign exchange pressures, but the specific scale of intervention and the significant differences in each country's strategies are not fully understood. Catalysts: 1) The July Fed interest rate meeting and changes in wording; 2) The latest monthly changes in foreign exchange reserves in India, Indonesia, South Korea and other countries; 3) Whether the USD/Asia currency exchange rate has stabilized under central bank intervention.