Macro Insights Weekly - USD strength and Asian FX

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.