(Bloomberg) — Currencies in India and Southeast Asia will rebound in the second half of the year, as the quickening pace of coronavirus vaccinations boosts their economic recoveries, according to the region’s top forecaster.

“I am more positive on South and Southeast Asian currencies than their North Asian peers,” said Alvin Tan, head of Asia currency strategy at RBC Capital Markets LLC, which topped Bloomberg’s ranking for Asia ex-Japan currencies last quarter. “There’s more room for positive surprises, particularly in Southeast Asia. The vaccination progress will be a very key component of that.”

Currencies in Southeast Asia and India have lagged their counterparts in Taiwan and China this year, as the re-imposition of lockdowns due to surging coronavirus cases weighed on growth. The Thai baht and Malaysian ringgit, for instance, are down more than 3% against the dollar, while the Taiwan dollar is up more than 1%.

The race, however, by countries from the Philippines to Malaysia to inoculate their populations is boosting optimism of a stronger rebound for Southeast Asia in the second half of the year.

“The export boom that has been powering currencies in Taiwan and China will gradually wane, as the U.S. and Europe come out of lockdowns and spend more on services rather than importing goods,” Hong Kong-based Tan said in an interview. “That will even out the divergence between currencies in North Asia and South, Southeast Asia that we saw in the first half.”

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The biggest risks for Asian currencies are a more hawkish Federal Reserve as that would boost the dollar, as well as the spread of the more infectious variants of the coronavirus, Tan said.

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