Asia currencies may fall 10% this year, Citigroup says: technical analysis

An Asian benchmark currency index may drop 10 percent to the lowest level since March 2009 by year-end should losses widen at the same pace seen in 2008, according to Citigroup Inc. technical analysis.

A weekly chart of the Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, closed below the 55-week moving average, signaling further declines, Shyam Devani, London-based technical analyst at Citigroup, said in an interview yesterday. It also broke below a trend line linking lows for the index in 2009 and 2010. The index may initially drop to the 200-week moving average, he said.

The Asia Dollar Index has slumped 4.4 percent since touching a 14-year high on July 27, leaving a 1.3 percent loss for the year. The gauge was up 0.2 percent at 114.99 as of 8:29 a.m. inSingapore.

“The 200-week moving average is at 112.17 and is the target” in the near term, Devani said. “If the move this year is going to be as aggressive as that seen in 2008 then an extended target would be 104.”

The loss may be led by South Korean won, which has “breached important” support at 1,172 to the dollar, suggesting a test of 1,277, Devani said. The currency fell 1 percent to 1,182.70 inSeoul today, taking this month’s decline to 9.8 percent.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

(Source: VNS)

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