Deutsche Bank - "Our top Asia FX trades are:
Trade #1: Short 1Y USD/PHP
Trade #2: Short 1Y USD/CNH
Trade #3: Short SGD NEER
The Philippines peso is our favorite currency in Asia for 2013. We look for USDPHP to break below 40 in Q1 and reach 38.0 by year-end. It enjoys a solid current account position underpinned by stable remittances and BPO receipts, and a robust growth/structural reform story which continues to gather interest, and which should eventually invite a credit re-rating to investment grade. BSP we think will struggle to counter FX strength. It has tried to reduce the attractiveness of the peso by cutting interest rates (policy and SDA), but with a booming economy and flush domestic liquidity, rates cannot be kept low for long. Attempts to depress FX carry (stopping rolling FX swaps onshore, and NDF position limits for banks) may serve to temper speculative interest but will not arrest fundamental flows. Direct intervention meanwhile will be challenged by pressure on BSP’s balance sheet. While negative carry across the curve makes short USD/PHP NDF positions costlier, we believe spot gains will be rewarding. So we look to add on retracements higher in the NDF points."