Southeast Asia: A new frontier in forex trading?

The start of the 21st century brought with it the expectation that four countries – Brazil, Russia, India and China – would come of economic age. The BRIC nations, it was predicted, would now start to define the path of the global economy. Later, South Africa would be added to the group too. Two decades on, however, the BRICS group has started to show contrasting fortunes.

In the wake of the 2008 financial crisis, the Asian powerhouses of China and India did what the three other BRICS members didn’t – and that’s continue on their upward trend. With a growing global influence, China and India arguably created new opportunities for the wider region under  the radar. And it is the southeast Asian nations within that economic sphere that would benefit. 

An incubator of economic growth

The Association of Southeast Asian Nations (ASEAN) comprises 10 nations – including Vietnam, Singapore and Thailand. It is a group that contains some of the fastest-growing economies and major financial centres. A combined population of more than 650 million underpins its strength – and its potential. It’s one reason why it is the next frontier market in a wide range of sectors.

While not all ASEAN nations offer the same level of stability as more developed economies, the opportunities are hard to resist. The growing middle class population is helping to drive growth and generate attractive returns for foreign investors. Manufacturing, e-commerce and payment processing are all finding new frontiers in southeast Asia. Why not forex trading too?

Future prospects for Asian forex

Singapore – at the heart of the ASEAN region – is one of the most prominent global forex hubs, according to the Bank for International Settlements. Daily trading volumes are hitting ever-new highs too. And the Singapore Dollar (SGD) continues to grow in popularity on the market as the third-most traded Asian currency behind the Japanese Yen (JPY) and Chinese renminbi (CNY).

But there are signs that other southeast Asian currencies are beginning to make their presence felt with global forex traders too. The value of the Thai Baht (THB) rose sharply against the US Dollar in 2019 – already as a more popular trading vehicle for investors than the Indian Rupee. It is also on an upward trend against the non-Euro currencies of Denmark and Poland.  

Risks and rewards in Asian forex

As with all frontier markets, the balance is one of risk and reward. For currencies of the lesser-developed (but growing) economies of Laos and Cambodia, the safeguards are not as robust if you’re an investor. But the right decisions at the right times can deliver strong results. ASEAN nations already attract inward investment – it makes sense for the same to apply in forex.

The signs are there. Vietnam, for example, is projected to enter the world’s top 20 economies by 2050 – based on a 2017 PwC report. Cambodia too has witnessed fast economic growth in recent times too. Of course, the path of progress is being checked by the Covid-19 pandemic. But it’s possible that, as the new frontier in forex trading, the rebound could be felt faster here.

Annika Bansal

Annika "The Chick Geek" is the founder of Small Business Sense shares small business ideas, tips and resources for independent Entrepreneurs and Small Business owners.