EM Asia FX Rates Views Positioning for Higher Energy, Elevated Core Yields and Further AI Investment

Economics Research 18 September 2026 | 6:46PM SGT

Positioning for Higher Energy, Elevated Core Yields and Further AI Investment

1. Positioning for higher energy prices, elevated core yields, and continued AI Danny Suwanapruti | investment. Asian macro markets this year have been navigating volatile energy Goldman Sachs (Singapore) Pte prices, a surge in AI-related exports, and rising core yields. As noted previously, Chris Poh tech-exporting economies have weathered the energy shock far better than others. | Goldman Sachs (Singapore) Pte For instance, despite being net energy importers, South Korea and Taiwan have seen their current account forecasts revised upward by our economists over the course of Santanu Sengupta | this year to 19% of GDP (versus 6.5% in 2025) and 25% of GDP (from 20% in 2025), Goldman Sachs India SPL respectively, underpinned by strong tech exports. Over the past few weeks, energy Arjun Varma prices have rallied sharply due to the ongoing Middle East conflict, with Brent crude | firmly above $100/bbl. Our commodity strategists highlight that even if crude prices Goldman Sachs India SPL

ease as supply gradually normalizes via “dark crossings”, natural gas and refined Goohoon Kwon, CFA | product prices are likely to remain elevated heading into the European winter, given Goldman Sachs (Asia) L.L.C. that global refining capacity remains below pre-war levels due to conflict-related Xinquan Chen damage. This presents a challenging environment for energy importers, which | includes most of EM Asia except Malaysia. Concurrently, global core yields remain Goldman Sachs (Asia) L.L.C.

elevated. The Fed raised rates by 25bps to 3.75%–4.00% and delivered hawkish Lisheng Wang | guidance, prompting our US economics team to add a 25bp October hike to their Goldman Sachs (Asia) L.L.C. forecast and raise their expected peak federal funds rate to 4.00%–4.25%. Meanwhile, 30-year JGB yields have risen to a record 4.0%, a level never seen since Irene Choi | the tenor’s inception in 1999. Goldman Sachs (Asia) L.L.C., Seoul Branch

Andrew Tilton Going forward, we expect the broad USD to remain range-bound, with energy prices, | AI-related investment, and carry dynamics providing support, while valuations and Goldman Sachs (Asia) L.L.C.

US policy measures (including intervention and UST buybacks) cap the upside. The combination of elevated core yields, higher energy prices, and AI-related exports will continue to define Asian market dynamics. Higher core yields and neutral to slightly hawkish Asian central banks should keep regional bond yields elevated; otherwise, narrowing local-to-USD rate differentials will place downward pressure on domestic currencies. As a result, we think it will be difficult for Indonesian bond markets to extend their recent rally. That said, some rates markets, such as South Korea, appear to have significantly overshot rate-hike expectations, presenting an opportunity to receive KRW IRS (more on this below). We expect currencies of economies that are heavy net energy importers with limited AI exposure, such as IDR and PHP, to underperform. Among the high-yielding markets, we think INR can outperform, as the RBI has demonstrated its willingness to manage INR weakness, which should cap upside in USD/INR. Tech-related currencies, particularly KRW, should outperform, as should MYR given its additional exposure to energy exports. THB has benefited from AI-related exports and foreign equity inflows this year, but a weak current account

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Goldman Sachs EM Asia FX/Rates Views

and a negative real rate differential versus the USD should keep the currency on the defensive. Meanwhile, we expect CNY to continue appreciating gradually by 3%–5% per year against the USD, funded via SGD. More details on our specific trade ideas are outlined below.

2. We recommend going long MYR/THB. We believe MYR is one of the best-positioned currencies in the region to benefit from both AI investment and higher energy prices, particularly natural…