(Bloomberg) — Counting on China as an anchor of strength has been a good tactic for traders of Asia’s emerging currencies. That link is losing traction as recovery paths from the coronavirus pandemic diverge.

While China’s economy has bounced back from the Covid-19 crisis, as shown by data such as retail sales and industrial production, countries including Indonesia and the Philippines are still grappling with rising outbreaks. The 30-day correlation between the offshore yuan and six regional counterparts has declined in the past week as the Chinese currency climbed to the strongest level in more than a year.

a group of people walking on a sidewalk: Retail Economy as China's Recovery Picks Up Speed on Rebound in Retail Sales

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Retail Economy as China’s Recovery Picks Up Speed on Rebound in Retail Sales

People walk past stores at a shopping area in Beijing on Sept. 20.


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Photographer: Yan Cong/Bloomberg

Asia’s two-speed recovery is making it difficult to predict the fortunes of the region’s exchange rates amid mounting headwinds

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