Appreciation of Asian currencies is expected to continue

U.S. Federal Open Market Committee interest-rate meeting held last week decided to again and again quantitative easing policy to stimulate economic growth. In addition to maintaining interest rates at zero to 1 / 4 per cent unchanged, and the continued maturity of the principal amount of mortgage securities, other than to buy government bonds, the Fed will at the end of June 2011 before the additional 600 billion U.S. dollars to buy long-term bonds.

JP Morgan Asset Management is expected, the Fed could maintain the quantitative easing policy until inflation rose to 2% of the official target, and the unemployment rate began to decline. Want to achieve this goal, the ultimate need to purchase long-term bonds may be more than 600 billion U.S. dollars.

The second phase of a long quantitative easing policy will increase the supply of dollars during the period, leading to depreciation of the dollar. Global risk assets will therefore continue to be supported, especially in the foreign exchange market, is expected to further appreciation of Asian currencies. Asian governments may be because of concerns about excessive currency appreciation to take foreign exchange intervention policy, but it could substantially boost the local market, hot money, instead pushing Asian markets.