ANZ -

- With the US FOMC delivering QE3, we expect more upside for Asian currencies.
- KRW is our preferred exposure in the Asian currency space given its high beta to risk and recent credit rating upgrade.
- We recommend buying a 3m USD put KRW call spread (strikes 1120 and 1080), at a cost of 1% with a potential payoff of 1:3.6.
- We also take profit on our long 2m USD/IDR NDF trade (initiated on August 13).
- Although we remain concerned about Indonesia’s current account deficit, we expect USD weakness and foreign buying of Indonesian assets in a risk positive environment to cap USD/IDR.