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Divergence in currency performance this year reflects underlying balance of payments (BOP) dynamics across the region, despite modest FX gains in 3Q26. The SGD (+1.7%), MYR (flat), and VND (+1.5%) have outperformed YTD, while the IDR (-4.8%), PHP (-5.9%), and THB (-4.2%) have depreciated. Both current account (CA) and financial flows have influenced regional BOP balances this year, with elevated global energy prices weighing on CAs, while financial flows have been shaped by evolving investor risk appetite and respective embedded risk premiums (see note).
The outperformance of the SGD and MYR has been driven by durable overall BOP surpluses, supported by favourable CA positions that have benefitted from AI-related export tailwinds in recent quarters. In addition to a standout CA surplus of 18.5% of GDP in 1H26, Singapore has benefitted from sustained foreign direct investment (FDI) inflows, safe-haven capital inflows amid geopolitical tensions, and the central bank’s proactive stance to steepen the appreciating slope of its FX policy band to curb imported inflation. In Malaysia, the trade surplus and portfolio inflows have benefitted from its position as a net oil & gas (O&G) exporter despite Middle East uncertainties, alongside continued FDI interest, but hawkish policy undertones have increased the risk of bond outflows. The Vietnamese dong’s stability should be supported by continued, albeit smaller, CA surplus, as well as strong FDI inflows and higher passive fund allocation following the reclassification of the equity market to FTSE Russell’s secondary emerging market status on September 21.
At the other end of the spectrum, the depreciation in the IDR, PHP, and THB reflects weaker BOP dynamics, particularly as financial flows have fallen short of wider CA deficits. The Philippines and Thailand are heavily reliant on O&G imports, which have led to a deterioration in their respective CA positions, widening to -4.8% of GDP in 1Q26 and -5.4% in 1H26 (-2.6% and +1.2% in 2H25). The Philippines also faced weak portfolio investor appetite, driven not only by its energy vulnerability but also by domestic governance challenges, placing pressure on the central bank to arrest the PHP’s slide. While Thailand also faces acute CA pressures as higher import growth outstrips strong exports, these would be partially offset by resilient FDI and equity portfolio interest. This was driven by an improvement in the domestic political landscape post-elections earlier this year. Indonesia's position has stabilised after a turbulent start to the year. A resumption in financial flows (inflows into debt and SRBIs, besides a positive net FDI balance) has helped offset a considerably wider current account deficit in 2Q26. This backdrop looks likely to extend into 3Q26.
With the spectre of high oil prices back on the table alongside surging US yields, ASEAN-6 currency performance is likely to remain differentiated in the remainder of the year. That said, we see reduced scope for currency-driven rate hikes, with inflation likely to be bigger factor in the coming months.
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Related Insights
- CNY and HKD rates: Diverging performance11 Sep 2026
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- Taiwan markets: No September policy move 10 Sep 2026
Related Insights
- CNY and HKD rates: Diverging performance11 Sep 2026
- USD treads cautiously ahead of CPI as Fed hike bets rise11 Sep 2026
- Taiwan markets: No September policy move 10 Sep 2026