It’s time for emerging Asian markets to reap the rewards after years of building up foreign-exchange reserves, as they become the latest destination for risk investors.
While no market has come through 2022 unscathed, countries from Indonesia to South Korea and the Philippines are reaping the rewards of a quarter-century preparing for a repeat of the turmoil that set off the Asian financial crisis in the late 1990s. Even as the dollar rallied, emerging Asia’s currencies are mostly faring better than traditional havens like the yen and the euro. The region’s bonds are standing out as a rare bright spot in a year that sent global debt into its first bear market for a generation.
Asia is benefiting from both good management and good luck. Inflation is weaker than for much of the globe, and local policymakers not only built up record foreign-exchange reserves but also have been moderate in their deployment. Fiscal prudence and calm crisis management have been the norm, and while those reserves have shrunk at the fastest pace on record, they are still higher than they were at the end of the last decade.