Asian currencies rose as the US Dollar weakened after the Iran conflict, but performance has differed across the region. MUFG’s current preference is for the Chinese Yuan (CNY) and Malaysian Ringgit (MYR) over the Indian Rupee (INR), Vietnamese Dong (VND) and Philippine Peso (PHP).
Asia entered the period with strong export momentum, supported by demand linked to artificial intelligence and technology. Early export data from Taiwan, South Korea and Vietnam showed faster export growth in March.
In China, year-on-year export growth slowed, which was linked to seasonal timing rather than weaker trade. South Korea’s export price data showed a 28% year-on-year rise in March, alongside a rise in DRAM prices.
Market risk conditions improved after the initial reaction to the Iran conflict, and the US Dollar moved below pre-conflict levels. Asian foreign exchange rates were helped by the weaker Dollar, while outcomes across currencies became more varied.
The article states it was produced using an artificial intelligence tool and checked by an editor.
Looking back at the period following the Iran conflict in early 2025, we saw the US Dollar temporarily weaken, which provided a tailwind for Asian currencies. Now, in April 2026, the situation has shifted as the Federal Reserve holds its key interest rate at 5.50% to combat a persistent core inflation rate that registered 2.9% in February. This policy is providing renewed strength to the dollar against most currencies.
The underlying export strength in Asia, first noted in 2025 due to the AI and technology boom, continues to be a major factor. For example, Taiwan just reported that its March 2026 export orders jumped 12% year-over-year, largely due to sustained global demand for advanced semiconductors. This trend supports economies that are deeply integrated into the high-tech supply chain.
Our preference for the Chinese Yuan and Malaysian Ringgit remains intact. China’s Q1 2026 GDP came in at a solid 5.1%, calming market fears of a slowdown, while Malaysia’s trade surplus continues to benefit from strong electronics exports. Derivative strategies, such as buying CNY call options or selling USD/MYR forward contracts, could prove advantageous in this environment.
Conversely, currencies like the Indian Rupee and Philippine Peso face headwinds. India’s trade deficit widened again in March 2026 as Brent crude prices climbed back above $95 per barrel, pressuring the Rupee. Traders should therefore consider positions that anticipate further weakness here, such as buying USD/INR futures.
The key takeaway for the coming weeks is to trade the divergence within the region. The strong US dollar creates broad pressure, but the technology export story creates clear winners and losers. A pair trade, such as going long the Malaysian Ringgit against the Indian Rupee (long MYR/INR), could effectively capture this performance gap.
