Asia FX Weekly

US CPI & yields and China data to drive regional FX markets LIN LI, PhD Head of Global Markets Research Asia Global Markets Research Global Markets Division for Asia E: Asia FX is likely to trade with a cautious tone in the week ahead, with currency performance driven primarily by US inflation data, movements in US Treasury MICHAEL WAN yields and developments in China’s growth outlook. A softer-than-expected US Senior Currency Analyst CPI print could reinforce expectations for further Fed easing and provide support Global Markets Research for higher-yielding Asian currencies, while any upside inflation surprise would Global Markets Division for Asia likely boost the USD and weigh on regional FX. At the same time, investors will E: monitor incoming Chinese activity and credit data for evidence that recent policy support is gaining traction, as a firmer China growth outlook would benefit pro- LLOYD CHAN cyclical currencies such as KRW, MYR and THB. Meanwhile, Asia FX remains Senior Currency Analyst sensitive to the interaction between domestic policy expectations and US yields, Global Markets Research while oil price movements and broader geopolitical developments will continue to Global Markets Division for Asia influence external balances and risk sentiment across the region. Overall, we E: expect Asia FX to remain range-bound, with domestic fundamentals taking a back seat to global macro drivers and China-related developments. KHANG SEK LEE Associate This week, foreign investors remained net sellers of Asian equities, with total outflows moderating to USD7.6bn after an intense net sale of USD11.5bn Global Markets Research previously. Selling was concentrated in Korea (USD4.9bn), India (USD1.3bn) and Global Markets Division for Asia E: Taiwan (USD0.8bn), while ASEAN markets continued to register modest outflows. Looking ahead, a softer US inflation print and lower yields could help stabilize sentiment and attract renewed inflows into Asian equities or reduced outflows, particularly in technology-heavy markets such as Korea and Taiwan. Conversely, another bout of USD strength and rising US yields would likely extend foreign outflows and keep investor positioning defensive across the region. Next week, India's September CPI and trade data will be closely watched 9 October 2026 following the RBI's recent 25bp rate hike. Consensus expects inflation to accelerate, driven by higher food and energy prices, while a wider trade deficit could reflect the impact of rising oil imports and festive-season gold demand. MUFG Bank, Ltd. A member of MUFG, a global financial group Singapore takes centre stage with the MAS policy decision and advance 3Q GDP estimate, where a modest tightening of the S$NEER policy band remains a possibility amid firmer inflation trends. South Korea's labour market data is expected to confirm continued employment resilience, although the release is unlikely to alter expectations for further policy tightening.

USDCNY SLIPS BELOW 6.70 AND THE FIXING MIDPOINT

USDCNY CFETS fixing rate USDCNY upper bound CNY fixing rate band 7.40 lower bound CNY fixing rate band

6.40 Jan-25 Apr-25 Jul-25 Oct-25 Jan-26 Apr-26 Jul-26 Oct-26

FX views Asian currencies delivered mixed performances this week as domestic factors drove differentiation across the region. INR underperformed despite the RBI’s 25bp rate hike, reflecting concerns over higher oil prices and a deteriorating trade balance, while VND outperformed following stronger-than-expected growth, trade and FDI- related developments. Meanwhile, PHP remained under pressure despite a relatively less foreign investors’ disinvestment. Looking ahead, regional currencies are likely to remain sensitive to US inflation data and Treasury yield movements, but local developments will also matter. We see scope for VND and SGD to remain relatively resilient on stronger domestic fundamentals, while INR and IDR may continue to face headwinds from elevated oil prices, external financing dynamics and a firm USD backdrop. China’s newly released “Policy Stance on the RMB Exchange Rate”, affirmed the PBOC’s managed-float framework, emphasizing market-driven two-way RMB movements while maintaining a…