Goldman Sachs believes Asia tech-related currencies will continue to outperform
AI summary card
Goldman Sachs believes Asia tech-related currencies will continue to outperform
The report is positive on the relative performance of CNY, KRW, TWD, INR, and MYR, more cautious on IDR and THB, and argues that AI-related exports, current account surpluses, and policy responses are the core drivers of FX divergence in Asia.
- A clear divergence has emerged within Asian FX: CNY and tech-related currencies such as KRW, TWD, SGD, and MYR are outperforming, while highly energy-import-dependent currencies such as THB, PHP, IDR, and INR are under pressure.
- The divergence between China’s exports and domestic demand has widened, but resilience in high-tech manufacturing and exports supports CNY; Goldman Sachs maintains its 12-month USD/CNY forecast of 6.50.
- South Korea and Taiwan are supported by AI-driven exports and current account surpluses, and KRW and TWD are seen as having the conditions to continue outperforming regional peers.
- India’s FX and bond market measures help support INR and may improve the chances of inclusion in the Bloomberg Global Aggregate Bond Index.
- Indonesia and Thailand face more visible pressure: IDR is dragged down by concerns over governance, fiscal policy, and export regulation, while THB is affected by falling gold prices and declining real rates.
Report interpretation
Overview
This is a Goldman Sachs macro strategy report on Emerging Asia FX and rates. The core conclusion is that Asian FX should not be viewed uniformly through overall USD strength or weakness; instead, divergence has emerged within the region, jointly driven by AI-related investment and exports, energy shocks, current accounts, capital flows, and central bank policy. The report believes that tech-export-related economies and currencies may continue to outperform in the coming months, while markets facing energy import pressure, low real rates, and greater fiscal and governance uncertainty are relatively under pressure.
Core views
The report’s main theme is continued outperformance by Asia tech-related currencies. CNY is constructive on the back of strong exports, undervaluation, and policy support for RMB internationalization; KRW is supported by a record current account surplus and a slowdown in foreign equity outflows; TWD is supported by semiconductor exports, a very large current account surplus, and accumulated USD deposits; MYR fundamentals remain supported by growth, exports, and FDI, with recent pressure coming more from political risk premium. By contrast, IDR is weaker due to natural resource export regulation, changes in central bank authorization, fiscal discipline concerns, and governance worries; THB is seen as a good funding currency because of lower gold prices and falling real rates.
Analysis framework
The report uses a regional relative value framework, comparing Asian currencies and rates across export structure, sensitivity to energy imports, current accounts, portfolio flows, central bank policy, real rate differentials, and political/fiscal risks. Combining macro data, central bank policy paths, commodity prices, equity and bond flows, and open trade recommendations, the authors form a 3-month relative performance view and specific trade ideas.
Methodology notes
Compare growth, external accounts, policy, and flow drivers across countries and currencies
The report is not a single-direction USD call; rather, it compares relative currency strength within Asia, distinguishing currencies benefiting from tech exports from those dependent on energy imports.
Assess opportunities in rates markets by combining central bank reaction functions, inflation pressure, and current yields
The report maintains a long recommendation on India 30-year government bonds, while giving neutral views on most Asian rates markets and a bearish view on Indonesian rates.
Assess whether current account surpluses can be offset by portfolio outflows
The South Korea section especially emphasizes that the sharp widening in the current account surplus had previously been offset by foreign equity outflows, while the recent slowdown in outflows creates conditions for a KRW rebound.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- CNYBullish Asian currency
- Strengths
- Strong exports, RMB is still viewed as undervalued versus the US dollar, and policy aims to promote RMB internationalization; appreciation also helps ease moderate inflation pressure.
- Weaknesses
- China’s domestic demand, fixed asset investment, and property indicators are weak, and growth momentum slowed notably from Q1 to Q2.
- Comparison
- The report believes CNY is the only Asian currency to appreciate against the US dollar this year and has still stood out despite broad USD strength.
- Risks
- If exports weaken, fiscal support disappoints, or policy re-emphasizes exchange rate stability, the pace of appreciation may be limited.
- KRWBullish Asia tech-related currency
- Strengths
- AI-driven export boom, current account surplus may hit a record high, and foreign equity outflows have slowed materially recently.
- Weaknesses
- Previously, KOSPI concentration and foreign investor de-risking offset support from the external account.
- Comparison
- If the KOSPI rally broadens or moves sideways, KRW is more likely to be driven by the strong current account story and outperform.
- Risks
- If foreign equity outflows accelerate again, KRW’s rebound may come under pressure.
- TWDBullish Asia tech-related currency
- Strengths
- Strong semiconductor and tech exports, very high current account surplus, and large accumulated USD deposits.
- Weaknesses
- The CBC prefers exchange rate stability, which may limit the pace of appreciation.
- Comparison
- Compared with South Korea, Taiwan’s portfolio flows are more balanced, so the external surplus provides more direct support to TWD.
- Risks
- A downcycle in tech exports or stronger FX management by the central bank may reduce the degree of outperformance.
- INRBullish FX and rates
- Strengths
- The RBI and the Indian government have introduced measures to attract capital inflows, growth forecasts have been revised up, and bond tax and FAR adjustments are favorable for index inclusion eligibility.
- Weaknesses
- Oil prices remain a key driver of USD/INR, and energy shocks would increase inflation and fiscal pressure.
- Comparison
- The report maintains Short THB/INR and recommends Long INR 30-year bonds.
- Risks
- If oil prices rise sharply again or global risk appetite weakens, INR may come under pressure.
- SGDNeutral and can serve as a funding currency
- Strengths
- Singapore’s growth is solid, core inflation remains manageable, and MAS is expected to keep policy unchanged.
- Weaknesses
- SGD NEER is already about +1.5% above the midpoint of the policy band, leaving limited room for significant further outperformance.
- Comparison
- The report is more inclined to use SGD as the funding currency for a long MYR position.
- Risks
- Lagged inflation pass-through from higher electricity prices could affect MAS policy preferences.
- MYRBullish Asian currency
- Strengths
- Growth, exports, FDI, and domestic demand remain supportive, while fuel subsidies buffer the shock from higher energy costs.
- Weaknesses
- It has recently weakened due to domestic political risk premium.
- Comparison
- The report believes MYR fundamentals still support its relative performance unless the near-term risk of an early election is priced in further.
- Risks
- If the Negeri Sembilan state election and coalition government stability worsen, the risk premium may rise further.
- PHPNeutral Asian currency
- Strengths
- If Middle East tensions ease and drive oil prices lower, Philippine assets could turn into regional outperformers.
- Weaknesses
- Strong pass-through from high oil prices, significant second-round inflation effects and wage hike pressure, and growth is dragged by slower public investment.
- Comparison
- Relative to tech-export currencies, PHP is more sensitive to oil prices, and its performance depends more on the path of energy prices.
- Risks
- If oil prices remain in the USD90-100/bbl range, PHP may continue to be under pressure.
- IDRBearish Asian currency and rates
- Strengths
- BI rate hikes and FX incentive measures can provide short-term support, while S&P’s maintenance of Indonesia’s BBB stable outlook offers some relief.
- Weaknesses
- Natural resource export regulation, expanded BI authorization, fiscal discipline concerns, and governance worries create medium-term pressure.
- Comparison
- The report expects IDR to underperform NJA FX peers.
- Risks
- If policy uncertainty deepens, fiscal deficit pressure rises, or the MSCI review outcome is unfavorable, IDR may come under further pressure.
- THBBearish and suitable as a funding currency
- Strengths
- Thailand’s GDP forecast has been revised up, and the political environment is more stable than before.
- Weaknesses
- Falling gold prices, low real rates, and energy shocks jointly weigh on THB.
- Comparison
- The report continues to recommend Short THB/INR and believes THB can serve as the funding leg for higher-yielding regional currencies.
- Risks
- If gold prices or tourism-related income rebound strongly, THB weakness may ease.
Key data
- DXY year-to-date performanceapproximately +5%Despite the stronger US dollar index, some Asian tech-related currencies have still relatively outperformed.
- Current USD/CNYapproximately 6.77Around 7.0 at the start of the year; the report believes CNY is the only Asian currency to appreciate against the US dollar this year.
- 12-month USD/CNY forecast6.50Goldman Sachs maintains the forecast, slightly below the forward price.
- China full-year 2026 GDP forecast4.6% yoyGrowth momentum is expected to rebound in H2 2026 with support from fiscal easing.
- South Korea current account surplus in Jan-MayUSD 143bnAlready above the full-year 2025 surplus of USD 123bn.
- South Korea 2026 current account surplus forecastclose to USD 300bn, about 13.9% of GDPThe report says this would be a record high if realized.
- Taiwan 2026 GDP growth forecast10.3%Further accelerating from 8.8% in 2025, driven by tech exports.
- Taiwan current account surplus forecast25% of GDPHigher than the record 20% of GDP in 2025.
- India CY2026 real GDP forecast6.8%Raised by 0.3 percentage points at the end of June.
- Singapore Q2 preliminary GDP5.7% yoyAbove the consensus of 5.5%, supported by the AI tech upcycle and financial intermediation activity.
- Malaysia Q2 preliminary GDP5.8% yoyAbove the consensus of 5.2%.
- Philippines policy rate4.75%BSP raised rates by 25bp each in April and June, and the report expects another 75bp of hikes in the remainder of 2026.
- Indonesia policy rate5.75%BI previously raised rates by 50bp each in May and June, and kept rates unchanged at the latest meeting.
- Thailand policy rate1.0%After inflation rose to 2.4% yoy, the real policy rate is in negative territory.
- Open trade recommendationsLong INR 30-year bonds；Short THB/INR；Short SGD/MYRThe open trades listed in the report correspond to targets of 6.90%, 2.70, and 2.90, respectively.
Impact & implications
In terms of investment implications, the report prefers expressing views through relative value rather than one-way USD direction: going long currencies or bonds supported by AI exports, current accounts, and policy, while using currencies with low real rates or pressured fundamentals as funding legs. At the portfolio level, the report supports continued focus on the relative strength of CNY, KRW, TWD, INR, and MYR, while remaining defensive on IDR and THB. On rates, India long-dated bonds are a clear bullish trade, while Indonesian rates are viewed bearishly due to macro policy and fiscal concerns.
Risks
- If oil prices rise further due to the Middle East or Red Sea situation, currencies highly dependent on energy imports will remain under pressure, while inflation and fiscal pressure in markets such as the Philippines, India, and Thailand will increase.
- If the Fed turns more hawkish than expected or the US dollar continues to strengthen materially, Asian currencies as a whole may come under pressure, even if relative divergence within the region remains.
- If the AI-related investment and tech export theme undergoes a sustained correction, the outperformance logic for tech-related currencies such as KRW, TWD, SGD, and MYR would weaken.
- If South Korea again experiences large foreign equity outflows, they may offset support for KRW from the current account surplus.
- If domestic political risks in Malaysia intensify, MYR’s fundamental advantages may be overwhelmed by a higher risk premium.
- Events such as Indonesia’s natural resource export regulation, changes in central bank authorization, fiscal discipline issues, and MSCI review could continue to weigh on IDR.
- Thailand’s low real rates, gold price movements, and energy prices may continue to amplify THB volatility.
What to watch
- Whether Brent oil prices remain elevated, and whether geopolitical risks related to the Middle East and the Red Sea ease.
- Changes in DXY, Fed policy expectations, and Goldman Sachs G10 FX team USD forecasts for EUR and JPY.
- China’s export strength, implementation of fiscal easing, and the PBoC’s management of the pace of CNY appreciation.
- South Korea’s KOSPI concentration, foreign equity flows, and realization of the current account surplus.
- Taiwan’s semiconductor export growth, CBC policy communication, and the pace of TWD appreciation.
- Progress on India’s inclusion in the Global Aggregate Bond Index, the scope of FAR bonds, and foreign bond inflows.
- Second-round pass-through from Singapore’s electricity tariff increases to core inflation, wages, and service prices.
- Malaysia’s Negeri Sembilan state election and pricing of early election risk.
- Implementation of Indonesia’s natural resource export regulation, fiscal deficit path, BI policy framework, and the next MSCI review.
- Thailand’s gold prices, real rate differentials, tourism outlook, and the BoT’s policy stance.