Stephen Jen Quoted in Financial Times: “The Coming Asian FX ‘Avalanche’”
By Robin Wigglesworth, Financial Times, May 7, 2025
In a recent Financial Times article, Robin Wigglesworth discusses the growing risks of a sharp correction in Asian currencies, drawing on insights from Stephen Jen, CEO of Eurizon SLJ Capital. The piece examines how shifts in dollar reserves among Asian exporters could trigger a sudden and significant adjustment in FX markets.
Stephen Jen, in his latest investor note, cautions about the potential scale and impact of such a move:
"We have long warned about the ‘Avalanche’ risk for the dollar. There could be USD2.5 trillion worth of ‘snow’ in China and more from the likes of Taiwan, Malaysia, and Korea, rising at a pace of USD500 billion a year — we conservatively guesstimate. Only a modest proportion of the very large trade surpluses these countries have earned have been repatriated back home, with the bulk of the export earnings being hoarded by exporters in USD deposits."
Jen explains that while many investors might dismiss the risk initially, a sudden dollar weakness could lead to a rapid and disruptive shift:
"Like in actual avalanches, ex-ante, many might dismiss the warnings, but ex-post, all would admit that it was an obvious risk."
The article also highlights Jen’s view that the recent moves in the Taiwanese dollar may only be the beginning of a broader pattern, as the combination of U.S. rate cuts, dollar overvaluation, and a rebound in China’s economy could act as triggers.
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