“Our base case is for shallow recoveries in the G3 economies, with the Fed not raising rates until early 2011,” Nomura said, referring to the U.S., Europe and Japan. “This alone could fuel strong capital inflows to Asia, but with the region being the stellar growth performer in the world, 2010 inflows could be more like a tsunami.”
Asian currencies may show “temporary weakness” before resuming their appreciation in 2010 amid the rebound in global economic growth and exports, according to the report, which was dated Dec. 16.
Investors should be “long” South Korea’s won because its valuations are “favorable” and the currency is less vulnerable to macroeconomic risks, Nomura said.
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