Asia market resilience could fade

ASIAN currency markets have enjoyed a brief moment of resilience, ANZ Research said, but this may be short-lived if global volatility intensifies in the wake of US President Donald Trump's tariff pronouncement.

Trump earlier this month announced sweeping reciprocal tariffs, prompting substantial market sell-offs that were only temporarily soothed by a 90-day pause.

But despite being among the regions most exposed to trade disruptions, Asia's foreign exchange (FX) and local currency bond markets were said to have relatively outperformed.

Singapore, South Korea and Thailand have outpaced US Treasuries and Malaysian and Philippine bonds trailed closed behind, ANZ noted.

Still, “while it is reasonable to look for safe-haven markets outside of the US following the broad-based sell-off in USD (US dollar) assets, we remain cautious in our assessment of Asia local markets outlook,” it added.

While Asia's FX and bond markets may continue to attract inflows as investors seek alternatives to the US, ANZ warned against complacency.

The region's relatively low yields, high trade exposure, and sensitivity to geopolitical shifts make it vulnerable in a deteriorating global environment.

“While there will be some degree of differentiation across currencies, we expect Asian currencies to bear the brunt of adjustment to tariffs,” ANZ said.

It highlighted that policy uncertainty could dampen both domestic and cross‑border investment while China's growing export share in the region was likely to intensify competition among currencies.

The peso, which has strengthened over the past few days and closed in P56 to the dollar territory, is expected to hit new record lows of P59.50:$1 in June and P59.80 in September.

ANZ warned that the currency could hit another all-time low of P60:$1 in December.

The peso's current record low is P59:$1, first hit in October 2022 as the Bangko Sentral ng Pilipinas was not seen as being aggressive enough to combat high inflation.

That level was again reached in November last year amid fears that Trump, who had just won the presidency, would push through with protectionist policies.