According to some analysts, 2015 should be a year of roller coaster activity for Asian currencies as the Federal Reserve in Washington makes arrangements to raise interest rates.

“The U.S. Federal Reserve will be hiking interest rates next year, while some Asian central banks will be acting in the opposite direction. Growth momentum is firmly in favor of the U.S., while structural and cyclical slowdowns in certain parts of Asia will see growth differentials narrow,” one economist predicted last week.

All eyes are on the Federal Reserve, which is widely expected to raise interest rates in July after winding down on the easing program it put into place during the last recession.

In contrast to the U.S. move, most of Asia's central banks are easing. The People's Bank of China cut interest rates for the first time in two years in October, while the Bank of Korea cut rates to a record low the same month. Meanwhile, the Bank of Japan remains committed to its massive stimulus effort, while calls for rate cuts in Thailand and Australia are growing.

Forecasts of a three percent depreciation in Asian currencies over 2015 is being noted, similar to the decline in 2014. However, risks of greater depreciation exist should a tighter U.S. monetary policy lead to larger portfolio outflows from the region.

According to Saxo Capital Markets, “The world's major central banks and economies are entirely out of sync and the oil price collapse has added a dramatic new geopolitical and economic twist to global markets.” Saxo's head of foreign-exchange strategy, John Hardy, said in a note last week that he anticipates “U.S. dollar strength on U.S. outperformance” next year.

Volatility

Hardy views the situation as one where four potential ‘what if' catalysts exist that can create currency volatility next year. These include U.S. junk bond outflows, the resignation of European Central Bank (ECB) president Mario Draghi, Chinese yuan devaluation and a substantial weakening in the Japanese yen.