Goldman Sachs: Asian tech-related currencies are still likely to outperform regional peers

Overview

This is a Goldman Sachs strategy report on emerging Asia FX and rates. The report’s core view is that since 2026, Asian macro markets have been driven mainly by energy supply shocks and the AI-related investment boom; although DXY has strengthened and USD/Asia has moved broadly higher, there has been clear divergence within Asia, with currencies benefiting from tech exports and current accounts significantly outperforming currencies highly dependent on energy imports.

Core views

The report believes the outperformance trend of Asian tech-related currencies will continue over the coming months. CNY is supported by strong exports, undervaluation, and policy intent around RMB internationalization, so USD/CNY may continue to move lower; KRW is supported by a surge in South Korea’s current account surplus, and a slowdown in foreign outflows from the KOSPI would help the won; TWD is supported by Taiwan’s semiconductor exports and exceptionally high current account surplus, though the pace of appreciation may be constrained by the CBC’s preference for exchange rate stability. By contrast, PHP is pressured by oil prices and inflation, IDR by policy uncertainty and capital flow pressure, and THB by falling gold prices, low real rates, and energy-related factors.

Analysis framework

The report uses a regional macro relative value framework, breaking down Asian currency performance into drivers such as the USD cycle, energy prices, AI-related exports, current account, capital flows, central bank policy responses, real rate differentials, and political risk, and then separately assessing FX and rates trading opportunities across economies.

Methodology notes

• Macro relative valueAsia FX/Rates relative performance framework

  Use growth, current account, capital flows, oil price exposure, real rates, and central bank policy to compare the relative attractiveness of different Asian currencies and rate assets.

  The report is not a one-way USD bet; rather, against a backdrop of overall USD strength, it seeks structural divergence within Asia, such as going long currencies with strong tech exports and current accounts and going short currencies with lower real rates or higher policy risk.

• External balance analysisCurrent account and export momentum

  Current account surpluses and export growth can provide fundamental support for the local currency.

  Export performance in South Korea, Taiwan, and China is used to explain the resilience of KRW, TWD, and CNY, with AI-related exports being the key incremental driver.

• Policy reaction functionCentral bank and fiscal policy assessment

  Central bank hikes, FX tools, exchange rate stability preferences, and fiscal impulse can alter the performance of rates and FX assets.

  The report compares the policy stance of BSP, BI, BoK, RBI, MAS, BNM, BoT, and CBC to assess their impact on local currencies and local bonds.

• Commodities and real ratesTransmission from oil prices, gold, and real rates

  Oil price shocks affect the terms of trade of energy-importing countries, while gold prices and real rate differentials affect currencies such as THB.

  High oil prices weigh on energy-import-related currencies such as PHP, INR, and THB; falling gold weakens support for THB, while Thailand’s low real rates also make THB more suitable as a funding currency.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CNY

  Asia’s core currency anchor, supported by strong exports, undervaluation, and policy support.

  Strengths

  Export-related activity remains strong, USD/CNY has fallen from around 7.0 at the start of the year to about 6.77, and policy support exists for RMB internationalization and moderate appreciation.

  Weaknesses

  Domestic consumption, fixed asset investment, and property activity are weak, and internal economic divergence is widening.

  Comparison

  CNY is the only Asian currency in the report that has appreciated against the USD this year, outperforming most regional peers.

  Risks

  If fiscal support is insufficient, exports slow, tariff shocks intensify, or the USD strengthens further, the appreciation path may be hindered.

• KRW

  A tech-related currency driven by AI exports and the current account surplus.

  Strengths

  South Korea’s current account surplus has expanded sharply, while AI-driven exports, fiscal revenue, and growth are strong.

  Weaknesses

  KRW had previously been pressured by foreign equity outflows and KOSPI concentration management.

  Comparison

  If foreign outflows slow, KRW is likely to outperform non-tech and highly energy-import-dependent currencies.

  Risks

  If the KOSPI rallies in a concentrated manner again and triggers foreign position reductions, it could offset support from the current account surplus.

• TWD

  A tech-related currency supported by semiconductor exports and an exceptionally high current account surplus.

  Strengths

  Taiwan’s export growth is at record levels, GDP and current account surplus forecasts are strong, and accumulated USD deposits also provide support.

  Weaknesses

  The CBC’s preference for exchange rate stability may limit rapid TWD appreciation.

  Comparison

  The report expects TWD to continue outperforming regional peers, though appreciation is likely to be gradual.

  Risks

  If semiconductor exports slow, the AI theme correction broadens, or the central bank more actively restrains appreciation, TWD upside may be limited.

• INR

  A currency and rates asset affected by RBI FX measures, oil prices, and expectations for bond index inclusion.

  Strengths

  India’s growth forecast has been revised up, while RBI and government capital-flow measures support INR and improve the chances of inclusion in the Global Aggregate Index.

  Weaknesses

  Higher oil prices remain an important source of pressure on USD/INR.

  Comparison

  Goldman Sachs prefers to express its relative view through short THB/INR and recommends long INR 30-year government bonds.

  Risks

  If Brent stays elevated or Middle East tensions escalate, INR may come under pressure; if progress on bond index inclusion falls short of expectations, it would also affect the rates trade.

• SGD

  A funding currency with solid growth but limited upside.

  Strengths

  Singapore GDP growth is solid, core inflation remains relatively moderate, and MAS is expected to keep policy unchanged while retaining a mildly hawkish bias.

  Weaknesses

  SGD NEER is already about +1.5% above the midpoint of the policy band, leaving limited room for further significant outperformance.

  Comparison

  Goldman Sachs prefers to use SGD as the funding currency for long MYR.

  Risks

  If electricity tariff increases drive core inflation and second-round effects above expectations, MAS’s reaction function may change.

• MYR

  A regionally strong currency influenced by the tech cycle, domestic demand, and political risk.

  Strengths

  Malaysia’s Q2 GDP was above expectations, while electronics exports, energy production, and credit growth support fundamentals, and BNM is expected to keep rates unchanged.

  Weaknesses

  Performance weakened in June, which the report attributes mainly to a higher domestic political risk premium.

  Comparison

  MYR was one of Asia’s best-performing currencies through much of 2025 and 2026, and Goldman Sachs expresses its bullish MYR view through short SGD/MYR.

  Risks

  If upcoming state elections or early general election risks trigger a higher political risk premium, MYR support may weaken.

• PHP

  An energy-import-related currency under pressure from high oil prices and inflation risks.

  Strengths

  If Middle East tensions ease and drive oil prices lower, Philippine assets could become a regional outperformer.

  Weaknesses

  Second-round inflation effects, minimum wage hikes, food price shocks, and weak public investment all create pressure.

  Comparison

  PHP has underperformed regional peers this year, especially due to its exposure to high oil prices.

  Risks

  If oil prices remain in the USD90-100/bbl range, PHP may stay under pressure; further BSP rate hikes may also weigh on growth.

• IDR

  A weak-leaning currency affected by policy uncertainty, capital flows, and BI’s reaction function.

  Strengths

  BI has taken measures such as rate hikes, higher SRBI yields, and hedging discounts to attract inflows, while S&P’s affirmation of BBB with a stable outlook provides short-term relief.

  Weaknesses

  Natural resource export regulation, expanded BI authority, MSCI review, and fiscal target conflicts have increased investor concerns.

  Comparison

  Goldman Sachs remains bearish on IDR and expects it to underperform NJA FX peers over the medium term.

  Risks

  If the Fed hikes in Q4 2026, domestic policy uncertainty rises, or export regulation disruptions intensify, pressure on IDR may increase.

• THB

  A funding currency driven by low real rates, gold prices, and the energy shock.

  Strengths

  BoT has raised its 2026 GDP forecast, and the political environment is more stable than before.

  Weaknesses

  Falling gold prices, negative real rates, the oil shock, and some equity outflows are weighing on THB.

  Comparison

  THB has shifted from being a strong Asian currency in 2025 to one of the weakest low-yield Asian currencies this year, and Goldman Sachs continues to recommend short THB/INR.

  Risks

  If gold prices rebound sharply, oil prices fall, or tourism terms of trade improve, THB shorts may face reversal risk.

Key data

• DXY year-to-date changeabout +5%The report says DXY has risen about 5% since January, but currency performance within Asia has clearly diverged.
• Current USD/CNY levelabout 6.77It has continued to decline from around 7.0 at the start of the year, and the report maintains a 12-month USD/CNY forecast of 6.50.
• China GDP growth forecast4.6% yoy for full-year 2026Goldman Sachs economists expect growth momentum in H2 2026 to recover with support from fiscal easing.
• South Korea current account surplusexpected to approach USD300bn in 2026, about 13.9% of GDPThe surplus from January to May has already reached USD143bn, exceeding the full-year 2025 level of USD123bn.
• Foreign equity outflows from South Koreaabout USD100bn year to dateForeign selling is mainly related to KOSPI concentration and portfolio rebalancing; the recent slowdown in outflows is helpful for KRW.
• Taiwan export growthmostly around 40%-70%Semiconductor and tech exports support the relative performance of TWD.
• Taiwan GDP growth forecast10.3% in 2026Higher than 8.8% in 2025, making it one of the stronger levels since the 1980s.
• Taiwan current account surplusexpected at 25% of GDP in 2026Higher than the record level of 20% of GDP in 2025.
• India real GDP growth forecast6.8% for CY2026Goldman Sachs raised the forecast by 0.3 percentage points at the end of June.
• Singapore Q2 GDP5.7% yoyAbove the market consensus of 5.5%, supported by the AI tech upcycle and financial intermediation activity.
• Singapore Q3 electricity tariff+17%Lagged electricity price adjustments may push up core inflation and create second-round effects.
• Malaysia Q2 GDP5.8% yoyAbove the market consensus of 5.2%, supported by both external and domestic demand.
• Philippines policy rate4.75%BSP raised rates by 25bp each in April and June, and the report expects another 75bp of hikes through the rest of 2026.
• Philippines Q1 real GDP2.8% yoyPublic investment has been dragged down by anti-corruption-related disruptions, and growth has been weak since H2 2025.
• Indonesia policy rate5.75%BI had previously hiked rates by a cumulative 100bp in May and June, and recently kept rates unchanged while expanding hedging incentives to attract foreign capital.
• Thailand 2026 GDP forecast by BoT2.3% yoyRaised from 1.5%, but THB remains under pressure from low real rates, falling gold, and the energy shock.
• Open trade: Long INR 30-year bondsEntry 7.34%, current 7.45%, target 6.90%, stop-loss 7.65%, total PnL -10bpsThe trade was initiated on 2026-06-26.
• Open trade: Short THB/INREntry 2.91, current 2.85, target 2.70, stop-loss 3.05, total PnL +2.3%The trade was initiated on 2026-06-12 and the report continues to recommend it.
• Open trade: Short SGD/MYREntry 3.13, current 3.17, target 2.90, stop-loss 3.30, total PnL -1.3%The trade was initiated on 2026-01-23.

Impact & implications

For investors, the main implication of the report is that Asian FX should not be judged only in a one-way manner based on USD strength or weakness; instead, they should focus on intra-regional divergence caused by tech exports, current accounts, and policy responses. At the portfolio level, Goldman Sachs prefers exposure to Asian currencies or related rate assets supported by the AI cycle, while using THB, SGD, and others as funding or relative value shorts; at the same time, investors need to guard against volatility from oil prices, U.S. tariffs, the Fed path, and regional political risks.

Risks

• Renewed escalation in the Middle East could push up Brent oil prices and weigh on energy-importing Asian currencies.
• U.S. tariffs of 10%-12.5% on multiple trading partners could hit Asian exports and risk sentiment.
• A more hawkish Fed or further USD strength could weaken the overall performance of Asian currencies.
• If the AI-related investment theme continues to correct, the relative advantage of tech-related currencies such as KRW, TWD, SGD, and MYR may weaken.
• Another large wave of foreign equity outflows from South Korea could offset current account support for KRW.
• Taiwan CBC’s preference for exchange rate stability may limit the pace of TWD appreciation.
• A higher political risk premium in Malaysia may weigh on MYR.
• Uncertainty around Indonesia’s policy framework and fiscal constraints may continue to drag on IDR.
• Changes in Thailand’s gold prices, real rate differentials, and oil prices may lead to greater THB volatility.

What to watch

• Whether USD/CNY continues moving toward 6.50 as Goldman Sachs forecasts.
• The impact of revisions to DXY-, EUR-, and JPY-related USD forecasts on USD/Asia.
• Whether Brent oil prices remain elevated, especially amid Middle East and Red Sea-related supply risks.
• The scope of U.S. tariff implementation and its impact on Asia’s export chain.
• Whether AI-related semiconductor and electronics exports continue to support South Korea, Taiwan, Singapore, and Malaysia.
• KOSPI concentration and the pace of foreign equity outflows from South Korea.
• Upcoming policy meetings and guidance from CBC, MAS, BNM, BSP, BI, BoT, and RBI.
• Second-round inflation effects in the Philippines, the impact of minimum wage increases, and the pace of public investment recovery.
• Indonesia’s natural resource export regulation, changes in BI’s mandate, the MSCI November review, and the fiscal deficit path.
• Malaysia’s Negeri Sembilan state election and the risk of an early general election.
• The trend in gold prices and whether their transmission to THB is weakening.