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World Cups have been currency friendly: DBS PB

World Cups have been currency friendly: DBS PB

Northeast and Southeast Asian currencies have performed well in the past three World Cups, according to DBS Group Research.

This had little to do with the victories of European teams, noted chief economist Taimur Baig and economist Ma Tieying.

The duo said thanks to a stronger Chinese yuan one year after its de-peg in 2005 and 2010, Asian currencies were led higher. The Singapore dollar and the Thai baht were the only Asian currencies that appreciated during every World Cup after the 1985 Plaza Accord.

‘The Indian rupee has alternated between appreciation and depreciation with each World Cup since 1978. If this trend holds up, the rupee should strengthen this time around after its fall during World Cup 2014,’ the economists stated in an investment note.

Elsewhere, the euro and the British pound have appreciated in the past four World Cups. To avoid scoring own goals, DBS recommends to stay clear of the volatile commodity-led currencies, namely, the Canadian dollar and the Australian dollar.

Commenting on Asia’s bright spots, the economists said South Korea and Japan, which are the only countries in Asia that have hosted World Cup games, are the most successful teams in the region.

South Korea, for instance, football and baseball are the most popular sports in the country. It has been qualified for nine World Cups since 1986, and won the fourth spot in 2002. That year South Korea’s GDP growth accelerated to 7.4% from 4.5% in 2001.

Japan has also appeared in World Cups consecutively since 1998, advancing to the Round of 16 in both 2002 and 2010.

These two countries, Baig and Tieying added, appear to have benefited in certain areas such as tourism. In 2002, the number of visitor arrivals rose 3.9% and 0.3% in South Korea and Japan respectively.

‘Moreover, South Korea’s outstanding performance during this World Cup helped to boost public confidence and the sense of pride. It also elevated South Korea’s soft power in the world, paving the way for the emergence of the Korean culture in mid-2000s,’ they said.

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