What’s going on here?
On the last trading day of 2024, Asian currencies struggled against the backdrop of looming US tariffs and a robust dollar, yet Taiwan’s tech stocks and emerging markets demonstrated resilience.
What does this mean?
Asian currencies felt the heat this year, with the South Korean won dropping 12.5%, its steepest decline since the financial crisis of 2008, dragged down by weakened export growth and political discord. Meanwhile, the Malaysian ringgit enjoyed a rare 2.8% yearly gain, its best since 2017, despite a slight end-of-year dip. Investors keenly await policy changes from President-elect Trump, whose potential actions could further bolster the dollar, pressuring Asian currencies like the yuan and yen. Yet, in the face of these challenges, Taiwan’s tech-heavy market soared 28%, marking its strongest run since 2009, and emerging markets, evidenced by a 5% rise in the MSCI stock index, displayed commendable resilience.
Why should I care?
For markets: Emerging resilience amidst pressure.
Despite the adverse effects of a strong US dollar and potential tariff hikes, some Asian markets show a promising outlook. The Indonesian rupiah and Philippine peso could sustain their resilience in 2025, bolstered by strategic market positioning. With Singapore’s indices climbing 17% this year and Kuala Lumpur poised for its best gains since 2010, specific sectors remain robust. Watch for potential dips in currencies like the won and yen, but don’t overlook opportunities in these resilient markets.
The bigger picture: Trading tensions and economic strategies.
The interplay of US trade policies and Asian economic strategies is increasingly critical. While China shows slower factory growth amid trade tensions, neighboring countries like the Philippines mobilize impressive budgets for economic expansion. As Pakistan marks a modest 0.92% growth in fiscal Q1, the broader narrative reveals a dynamic regional response to global shifts. This interplay will continue shaping economic policies, highlighting the need for strategic pivots in response to US economic leadership and global market rhythms.