The volatility in financial markets did not spare Asian currencies. The Indonesian rupiah (IDR) was the outstanding performer rising by 2% after the central bank intervened in the currency market to defend the IDR and it raised interest rates. The Reserve Bank of India also sought to defend the Indian rupee (INR) as it moved towards 59 against the USD. In the coming months, we expect sentiment to improve as US data improve. This should result in a recovery of Asia currencies versus the US dollar. But once the market starts to anticipate Fed rate hikes for 2015 in the second half of 2014, they should come under pressure again. We also maintain our view that the Chinese yuan (CNY) will outperform other Asian currencies given its resilience to rising yields in the US, weak yen, attractive valuation and internationalisation plans in the coming year.