Asia FX: Tech-linked FX could outperform against US Dollar - MUFG

Michael Wan at MUFG argues that Asian currencies have been more resilient than others, supported by strong AI-related exports and a less acute Oil and diesel supply situation in the region. He sees a good chance that Asia FX can outperform across various scenarios, though with dispersion across pairs. Previous concerns around FX carry unwinds in Latam have stabilised, reinforcing Asia’s relative appeal.

Resilient Asia FX with tech support

"Looking at Asia, it’s interesting that Asian currencies in general have been somewhat more resilient this time around relative to other currencies."

"We think this is due to AI exports remaining quite strong so far, while from an oil and oil product perspective especially diesel the supply situation in our region seems less acute relative to others."

"Concerns around unwinding of FX carry trades have earlier dominated markets and led to underperformance of Latam currencies but this has stabilised."

"Moving forward, we see a good chance that Asia FX can outperform across a range of scenarios but with some continued dispersion across key FX pairs."

"We like the tech-linked currencies such as TWD and KRW, and to a smaller extent MYR and SGD."