Heng Koon How, head of markets strategy at UOB, says the move will have little impact on Asian markets.
Heng added Asia's strong trade fundamentals are likely to help countries in the region to weather the winding down of the Fed bond purchases.The U.S. Federal Reserve's widely anticipated move to accelerate the end of its bond-buying program is unlikely to lead to volatility in Asian markets, according to a strategist from United Overseas Bank.
The U.S. central bank is holding its monthly monetary policy meeting this week, where it is expected to taper its bond purchasesin January, compared with $15 billion currently. The Fed is also expected to start raising interest rates in 2022. In 2013, the Fed triggered a "taper tantrum" when it began to wind down its asset purchase program. Investor panic triggered a sell-off in bonds, causing Treasury yields to surge. As a result, emerging markets in Asia suffered sharp capital outflows and currency depreciation, forcing central banks in the region to hike interest rates to protect their capital accounts.
"Asia in general, so far, all the central banks are very well prepared. FX reserves are at record high. This view of the Fed tightening has been well communicated. We should be able to handle a bit more of the so-called outflow of hot capital when the Fed does start hiking," Heng Koon How, head of markets strategy at UOB, told CNBC's "Squawk Box Asia" on Monday.
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