Currency Risk Assessments

In addition to our regular monthly surveys for our panellists central projections for over 90 currencies we also ask our panellists for their estimates of the likelihood of alternative, perhaps less likely, outcomes in certain major currencies over the next twelve months in Foreign Exchange Consensus Forecasts (in July and December) for the currencies listed below.

To download a sample issue of Foreign Exchange Consensus Forecasts please click on the button below or continue reading to learn more about this special survey.
 

G7 Asia Pacific Eastern Europe Latin America Africa
Euro Australian Dollar Czech Koruna Argentinian Peso South African Rand
Japanese Yen Chinese renminbi Hungarian Forint Brazilian Real
UK Pound Hong Kong dollar Israeli Shekel Chilean Peso
Canadian Dollar Indian Rupee Polish Zloty Mexican Peso
Indonesian Rupiah Russian rouble Peruvian Sol
Malaysian Ringgit Turkish lira Venezuelan Bolivar
New Zealand dollar
Philippine Peso
Singapore dollar
South Korean Won
Taiwanese dollar
Thai baht

 

The chart and text commentary below represent a portion of this special survey taken from our December 2018 issue of Foreign Exchange Consensus Forecasts.

Currency Risk Assessment, December 2018 Survey

Consensus forecasts are averages of individual panellists’ predictions of how a currency is most likely to move over a given time horizon, but most forecasters would also attach some probability to various alternative outcomes or scenarios. Our special survey of ‘Currency Risk Assessments’ is an attempt to quantify these uncertainties, using our panellists’ estimates to produce a number of consensus probability or risk distributions. This approach is not only useful in the case of pegged or managed currencies, but also for those wherein confidence in the central scenario is relatively low and a high probability in attached to large corrections.

The UK pound is among those that may benefit from such an analysis, as it continues to be held down by genuine concerns about a cliff edge situation, in which the UK economy might depart the European Union without any sort of deal. The consensus attaches a probability of 30.2% to UK currency movements of between +/-5.0% against the US dollar over the next twelve months. Yet, as can be seen in the table above and on the chart on the next page, a high probability is attached to a currency revival of greater than 6.0% (43.3%). Our assessment of this topic for the euro zone and Canada also suggests a moderate bias toward an appreciation of their respective currencies of greater than 6.0% in 2019 (30.1% for the euro), following somewhat lacklustre performances in 2018.

The outlook for the Chinese renminbi has become less certain over the past twelve months, due to the US-Sino trade dispute. Most panellists expect the currency to trade within a +/-5.0% range during the course of 2019, with probabilities of 25.5% and 22.0% attached to moves of greater or less than this amount, respectively.

A portion of text taken from Foreign Exchange Consensus Forecasts, December 10, 2018.