DBS Group Research economists Radhika Rao and Chua Han Teng highlight that the ASEAN-6 and India are facing renewed inflation pressures due to higher energy prices, particularly in the context of Middle East tensions. The report notes that Singapore has already tightened monetary policy via the SGD NEER band, while the Philippines and Vietnam are expected to lead upcoming rate hikes. Indonesia and Malaysia are positioned in the middle, and Thailand and India are likely to adopt a more gradual approach, relying on fiscal policy as their primary response to the energy shock [1]. The sequence of tightening will depend on the extent to which higher oil and gas prices are passed through to domestic prices or if subsidies are cut, impacting price stability [1].
MUFG’s Senior Currency Analyst Michael Wan observes that Asian currencies have benefited from a weaker US Dollar following the Iran conflict, but there is growing dispersion across the region. Wan emphasizes strong export momentum, particularly driven by AI and technology demand, as a key factor supporting Asian currencies. Early export reporters such as Taiwan, South Korea, and Vietnam saw a significant increase in export momentum in March, with South Korea reporting a sharp 28% year-on-year rise in export prices, likely due to DRAM price acceleration. China’s export growth moderated, attributed to seasonal factors rather than a slowdown [2].
From a financial market perspective, Wan notes that risk sentiment has recovered following the Iran conflict, and the US Dollar has weakened beyond pre-conflict levels. This has supported Asian currencies, but outcomes are diverging. MUFG maintains a preference for the Chinese Yuan (CNY) and Malaysian Ringgit (MYR), while the Indian Rupee (INR), Vietnamese Dong (VND), and Philippine Peso (PHP) are underperforming. The exact FX levels remain dependent on global factors [2].
Both sources highlight differentiated responses among Asian economies to external shocks. DBS points to monetary policy divergence in response to energy-driven inflation, while MUFG underscores export-driven FX performance and currency dispersion, with Malaysia appearing in the middle ground for both policy tightening and FX preference [1][2].
CONCLUSION
ASEAN-6 central banks are responding to energy price shocks with varying degrees of policy tightening, while Asian currencies are showing selective outperformance driven by strong exports and a weaker US Dollar. Malaysia stands out as a middle-ground player in both monetary policy and FX performance. Market participants should monitor regional policy moves and export trends for further direction.