'Chaotic era' for Asian currencies: Bank of America is not bullish on any of them

Bank of America is bearish on a slew of Asian currencies and neutral at best on others, as the investment bank says it is the start of a "chaotic era."

"We are not bullish on any currency in Asia," Bank of America said in a recent report, with many currencies impacted by a delayed Federal Reserve easing cycle and sustained strength in the U.S. dollar.

The investment bank singled out the Chinese yuan, South Korean won, Taiwan dollar, Thai baht and Vietnamese dong under its bearish category.

Among their "neutral" list of currencies are the Hong Kong dollar, the Indonesian rupiah, the India rupee, the Malaysian ringgit, the Philippine peso and the Singapore dollar.

BofA forecasts the Chinese yuan to trade at 7.35 against the dollar this quarter and weaken to 7.45 in the third and fourth quarters.

The bank expects yuan depreciation pressures to sustain into the second half of the year, due to: the delayed Fed easing, China's disinflationary behavior aggravating yield gap with the U.S. and a weak financial account as a result of a deterioration in foreign direct investment.

Hotter-than-expected U.S. inflation in March pushed back market expectations of a rate cut to September, and lowered the outlook this year to two reductions from three.

The onshore CNY is currently trading at 7.24 per U.S. dollar. 

The outlook for the Korean won "significantly turned" after the Fed pushed back on the timing of the rate cuts and Middle East geopolitical risks became a major headwind, said BofA.

"Year-to-date, we have seen impressive inflows into Korean equities, but these inflows are beginning to reverse as global equities are turning from the two aforementioned risk," BofA's economists wrote.

The South Korean won recently slipped to an 18-month low