Macro Insights Weekly - USD strength and Asian FX

30 October 2023


  • The high-for-long narrative for US rates has taken hold in the last three months, manifesting in a rebounding USD, and by extension, weakness in some Asian currencies. But risks are manageable.
  • Currency weakness poses a couple of headaches at this phase of the cycle.
  • Inflation passthrough is one; external funding stability is the other.
  • BI and BSP’s rate hikes this month reflect attention to both factors.
  • We don’t see contagion or overshoots in the region.
  • Asian FX may face some pressure, they have much sounder fundamentals than their peers elsewhere.