The dollar was last at 111.99 yen, within kissing distance of Friday's 112.16 which was the highest since mid-July. It gained 0.9 percent last week.
KUALA LUMPUR: Aberdeen Asset Management Asia Ltd, a global investment management group, expects the US dollar strength to wane in the second half of next year, derailed by the impact of the US-China trade war.
Asia Pacific Head of Multi-Asset and Macro Investing Irene Goh said the trade war declared by the US against China would negatively impact margins and corporate earnings in the world's largest economy, making the greenback less attractive to investors.
"We could potentially see the dollar coming off perhaps sometime in the second half of 2019," she said at the Investment Conference 2018 here today.
She said the strengthening of the US dollar was driven by the interest rate hike by the US Federal Reserves and strong corporate growth, boosted by tax cuts and public-spending hikes.
The US Federal Reserves has been ahead of the pack of other major central banks and emerging markets in raising rates, so that in itself has actually resulted in favour of the US dollar, she said.
Goh said the US economy was further boosted by the fiscal thrust and tax break delivered by the Trump administration which has benefited US corporates earnings.
"These few factors are very promotive of US growth and that itself is a very strong driver to the dollar," she said, adding that, however, corporate earnings were expected to be impacted by the trade war as production cost would likely rise going forward.
"When you close your door and start imposing certain tariff on others, it creates a more expensive importing structure to your consumers.
"Ultimately, that will feed through the prices and it may eventually means higher cost of productions for companies, and naturally lower margin and ultimately, impacting the bottom line and earnings," she added.
Themed "Diversification: Redefining Perspectives", the half-day conference discussed opportunities in the current climate across a suite of asset classes. - Bernama
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