Asia FX Weekly

Asian FX is experiencing broad weakness driven by capital flight and high US yields. Central banks across the region are responding with varied policy measures to shore up currencies and manage inflation.

Key Takeaways

• 1.Asian FX remains under pressure due to elevated oil prices, geopolitical risks, and persistent US yields, causing capital outflows particularly from high-beta, oil-sensitive currencies.
• 2.The RBI implemented multiple measures to support the Indian Rupee, including tax incentives for foreign investors and concessional FX swap facilities for banks.
• 3.Indonesia is undertaking a structural regime shift toward a state-controlled export framework for commodities to strengthen fiscal position and FX reserves.

Table of Contents

• FX views
• USD/CNY: An accelerated May PPI inflation vs well-contained CPI inflation
• USD/KRW: KRW remained under pressure despite positive May exports data
• USD/INR: RBI (June 2026) – Moving to shore up the Indian Rupee
• USD/IDR: State-led commodity export reform a high-stakes shift for IDR
• Week in review
• Capital Flows
• Government bond yield spreads: Mixed for 2y and 10y
• Central bank monitor
• The week ahead
• Forecasts
• Core indicators

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