Asia FX: Yen-led winners and export backdrop – MUFG

Michael Wan at MUFG explains that South Korean Won (KRW), Thai Baht (THB), Singapore Dollar (SGD) and, to a smaller extent, Philippine Peso (PHP) are the main Asian FX beneficiaries if Japanese Yen strength persists, given their higher sensitivity to USD/JPY. He notes that correlation and conditional beta to Yen moves have fallen for Chinese Yuan (CNH), Taiwan Dollar (TWD) and Indian Rupee (INR) since 2025. Robust Asia PMI data suggest strong export momentum, with growth expected to slow into 2027 but stay elevated.

KRW, THB, SGD, PHP sensitivity to JPY

"Overall, the Asia PMI numbers that were out yesterday suggests that export momentum remains quite robust, and this fits in as well with the lead indicators we track which tells us that export growth should slow into 2027 but remain at a high level overall."

"Looking across the Asian FX complex, our analysis shows that the South Korea won, and to a smaller extent the Thai Baht, Singapore dollar and Philippines Peso in that order are more sensitive to Japanese Yen moves."

"For most currencies this sensitivity has come down since 2025, and certainly for the likes of CNH, TWD and INR."

"KRW is the one which stands out where both conditional beta measures and correlation have risen over the last 2 years."

"As such, if the Japanese Yen strengthening moves continue, we would expect KRW, THB, SGD, and to a much smaller extent PHP to benefit in Asia FX context."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)