Kuala Lumpur: Asian currencies are expected to strengthen by between three and five per cent per annum over the next couple of years. Aberdeen Asset Management Asia director, Donald Amstad, said the global economy faced significant challenges, not least the risk of growth fading in the developed world. He said the emerging markets, in particular Asia, would remain the bright spots. "The larger Asian economies, with their expanding internal markets, would continue to decouple. "This will support currency appreciation, in particular, over the medium to long term," he told a media briefing on 'Mid-Year Outlook 2010' here Thursday. The ringgit has been traded between 3.35 and 3.70 against the dollar for the past few weeks. The local unit closed higher against the US dollar at 3.2380/2400 today compared with 3.2470/2500 yesterday. Amstad said outlook for the US dollar remained negative notwithstanding the weak euro and global bond investors typically remained structurally underweight on emerging markets, Asian currencies as well as bond markets. European sovereign risk has heightened considerably this year, with peripheral countries, led by Greece, forced to take drastic austerity measures in order to retain confidence of bond and equity markets, he said. Amstad said real interest rates were expected to remain negative in numerous countries. Meanwhile, Stephen Docherty, Aberdeen Asset Management's head of global equities, said in the current economic environment, equity investors could potentially be rewarded for taking a global, unconstrained approach to investing. "We expect equity returns to be in the single digit this year, given the strength of market returns last year," he said. Docherty said the best way to achieve this would be to focus on individual companies and their prospects and ignore benchmark indices as they were backward looking.-Bernama

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