The report examines the interplay between lower global oil prices and a hawkish shift at the US Federal Reserve. While lower oil prices provide relief to Asian economies, a stronger US Dollar remains a significant pressure point for regional currencies.
Key Takeaways
- 1.The US-Iran deal and subsequent decline in oil prices helped ease inflation fears in Asia, but hawkish messaging from the new Fed Chair, Kevin Warsh, and high US rates continue to support a stronger US Dollar.
- 2.Asian central banks are adjusting policy differently; while Indonesia and Philippines hiked rates to defend their currencies, others like Thailand and China focus on growth support.
Table of Contents
- FX views
- USD/CNY: The pair likely driven by the dollar movement in near term
- USD/TWD: CBC in no hurry to make a move yet
- USD/PHP: BSP (June 2026) - Balancing the risks
- USD/IDR: BI steps up FX defence as dollar strength persists
- Week in review
- Capital Flows
- Central bank monitor
- The week ahead
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Authors
Lin Li, PhDMichael WanLloyd ChanKhang Sek Lee
Securities
USDCNY
Themes
Fed Policy NormalizationGeopolitical De-escalation
Regions
Asia PacificMiddle EastChinaIndiaIndonesia