Deutsche Bank dominates Asian foreign currency market

MANILA, Philippines - Deutsche Bank is the largest provider of liquidity to Asian currency markets with market share of 22.39 percent, based on a global foreign currency exchange (FX) survey carried out by respected capital markets publication, Euromoney.

The results come as Asian currencies continue to appreciate, increasing the need for exporters in the region to manage their exposure to foreign currency earnings. Asian currencies will keep rising on the back of stronger domestic economic growth, higher interest rates, increased investor inflows and a potential revaluation of the Chinese yuan.

Deutsche Bank chief country officer for the Philippines Enrico Cruz said concerns for a stronger peso might affect the earnings of local exporters as proceeds from foreign currency earnings are reduced in local currency terms.

“Being the largest provider of liquidity to Asian FX markets allows us to provide better pricing and a broader range of products to help our clients manage this exposure,” Cruz said in a press statement.

Deutsche Bank officials said that the greater the market share a bank has the more clients it can reach, allowing it to provide tighter pricing across more currencies and with the best liquidity.

Deutsche Bank expects the Philippine peso to appreciate to P44 against the US dollar by the end of the year.

Part of this is due to greater demand for Philippine assets, particularly government bonds, which have benefited from the $7 billion that Deutsche Bank estimates foreign investors have allocated to emerging market bond funds since the start of the year.

Also attractive for investors is the potential for further interest rate rises in Asia at a time when interest rates in the United States, Europe and Japan remain very low.

Should China eventually allow the yuan to appreciate, Asian central banks will likely allow further currency appreciation as concerns over a loss of competitiveness against yuan are alleviated.

This year’s Euromoney survey polled over 11,700 corporate and institutional FX clients globally, with total volumes in global FX markets estimated to be $167.4 trillion.