Report published September 29, 2026
Higher Oil and US Yields Deepen Asian FX Divergence – MUFG Research
MUFG · September 29, 2026
Surging US Treasury yields above 5.2% and Brent crude holding over $100/bbl are straining Asia FX resilience and driving currency divergence. MUFG expects defensive strength in SGD and CNY, while IDR and THB face greater downside vulnerability.
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Finvaulta summarizes MUFG's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Asian currencies have shown resilience since July despite US 10-year yields crossing 5.2% and Brent exceeding $100/bbl, but hawkish Fed expectations are now testing this stability.
- 2.Divergence is widening across Asia FX: SGD and CNY are poised to stay defensive, whereas oil importers with higher beta like IDR and THB remain significantly more exposed.
- 3.BOJ July meeting minutes confirmed an ongoing tightening bias that should contain JPY downside, though a USD/JPY downmove requires US yield moderation.
Table of Contents
- Market Highlights
- Ahead Today
- INDICATIVE RATES 28-Sep-2026
- FOREIGN EXCHANGE
Report data
CHART 1: SINCE JULY, ASIA FX REMAINED RESILIENT DESPITE CLIMBING US 10-YEAR YIELDS — as of September 28, 2026.
| Metric | Estimate | Context |
|---|---|---|
| US 10-year Treasury yield | 5.2% | Moved above 5.2%, climbing sharply since July |
| Brent crude oil price | 100 USD/bbl | Remained above $100/bbl, creating negative terms of trade shock |
| China industrial profits growth (Jan-Aug) | 15.7 % yoy | Profits rose 15.7% yoy in January-August |
| China industrial profits growth (August) | 4.2 % yoy | Slowed to 4.2% yoy in August, the weakest pace this year |
| BOJ policy rate | 1.25% | Hiked to 1.25% in September |
Reports in this series
Asia FX Talk is shown in chronological order through this edition, published on September 29, 2026.
Part of the Asia FX Talk series — view all 70 editions
Looking for the latest edition? Asia FX Talk (Oct 9, 2026)
- Sep 23Asia FX Talk
- Sep 24Asia FX Talk
- Sep 25Asia FX Talk
- Sep 28Asia FX Talk
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