Focus on China data and US CPIAsia FX Weekly

Key arguments

• We continue to expect gradual appreciation in CNY, given strong trade surpluses, exporter conversion, and coupled with the general FX policy direction by Chinese authorities.
• Our analysis shows that KRW, followed by THB, SGD, and to a smaller extent PHP are likely to be bigger beneficiaries if JPY were to strengthen further, all things equal.
• We expect the Fed to remain on hold through 2026, although risks have increased.
• We expect BNM to remain on hold through 2026, although risks tilt towards tightening if cost pressures pass through.
• In South Korea, persistent inflation should reinforce the BOK's tightening bias. We expect one further 25bp hike by year-end.
• We therefore continue to expect 50bps of RBI tightening beginning in December.
• In Thailand, inflation is expected to rise to 2.4%yoy as higher food and energy prices feed through, but should remain comfortably within the BOT's target range, allowing policymakers to maintain an unchanged policy rate for now.
• For Vietnam, we forecast USD/VND at 26,100 in Q4 2026 and 26,200 in Q1 2027, implying gradual, managed depreciation rather than disorderly adjustment.

Corresponding source evidence

1. In the Asia space, our analysis shows that KRW, followed by THB, SGD, and to a smaller extent PHP are likely to be bigger beneficiaries if JPY were to strengthen further, all things equal. · short-term
2. We forecast USD/VND at 26,100 in Q4 2026 and 26,200 in Q1 2027, implying gradual, managed depreciation rather than disorderly adjustment. · 2026Q4 and 2027Q1
3. For equities, the larger external buffer and lower risk of sharp INR depreciation are supportive, but rising domestic yields should increase funding costs and weigh on valuations, particularly across rate-sensitive sectors. · medium-term