Core Viewpoint - The Philippine peso has fallen to a one-week low following a 25 basis point interest rate cut by the central bank, which was largely anticipated by the market and did not cause immediate volatility [1][11]. Currency and Economic Outlook - The central bank governor's comments indicate that the policy outlook will depend on the speed of economic confidence recovery, reflecting weaker-than-expected economic recovery and delayed government spending [2][12]. - The peso has increased by 0.4% this week, potentially ending a four-week decline [2][12]. - Rising oil prices may impact Asian currencies, particularly the Philippine peso, as most major economies in the region are net oil importers [3][13]. Market Performance - The South Korean stock index has surged over 2%, reaching a historical high, with a 5.3% increase this week [6][12]. - The Singapore dollar has decreased by 0.6% this week, potentially marking its worst weekly performance since mid-November [6][12]. - The Thai stock market has declined by 0.6% but is still expected to rise by 3.4% this week, achieving a sixth consecutive week of gains [10][15].

Group 1 - The recent decline of the US dollar index has raised concerns about "de-dollarization" and geopolitical risks, prompting market attention [1][15] - Bloomberg Industry Research predicts that the Chinese yuan and Malaysian ringgit could generate excess returns for Asian currency portfolios due to structural advantages and reduced correlation with the dollar [1][15] - The relative performance of low-interest and high-interest Asian currencies will depend on the timing of the "de-dollarization" trend [1][15] Group 2 - Zhao Zhixuan, Bloomberg's Chief Forex and Rates Strategist for Asia, suggests that the dollar index may need to fall below 90 to trigger policy intervention, indicating further downside potential from current levels [1][15] - The yuan is expected to be the most favored currency this year, with the USD/CNY exchange rate potentially challenging the 6.7 to 6.8 level [1][11] - The dollar faces multiple structural challenges, including portfolio rotation away from US assets, ongoing arbitrage trading, and expectations of a weak dollar policy [1][15] Group 3 - European institutions, including Danish pension funds, have begun to exit the US Treasury market, with China's holdings of US debt at their lowest level since 2008 [2][16] - The trend of reducing US Treasury holdings is likely to continue, but a complete sell-off is unrealistic due to the lack of alternative markets with similar depth and liquidity [2][16] - The future may see a coexistence of multiple reserve currencies and regionalization of currency use, although the dollar's leading position is unlikely to be replaced in the short term [2][16] Group 4 - Concerns over Japan's "monetary fiscalization" have led to selling pressure on its long-term bonds, which may transmit pressure to global bond markets [2][24] - The Japanese yen is expected to strengthen against the dollar this year, with a reasonable equilibrium exchange rate around 129 [2][24][25] - Other Asian currencies are expected to show divergence, with low-interest currencies like the Thai baht, Malaysian ringgit, and Singapore dollar benefiting from a declining dollar cycle [2][12] Group 5 - The yuan is viewed as the most promising currency this year, with expectations of steady appreciation against both the dollar and a basket of currencies [2][11][26] - Factors supporting the yuan's appreciation include favorable policies, interest rate differentials, and capital inflows from the stock market [2][11][26] - The Thai baht, Malaysian ringgit, and Singapore dollar are also expected to strengthen, while high-interest currencies like the Philippine peso, Indonesian rupiah, and Indian rupee may weaken due to fiscal stability concerns [2][12][29]

Core Viewpoint - The Indonesian stock market is experiencing its worst two-day decline in 30 years, driven by concerns raised by MSCI regarding the market's investability and transparency [3][6]. Market Performance - On January 29, the Jakarta Composite Index fell by as much as 10%, triggering a trading halt, while it had previously dropped over 8% on January 27, leading to another trading suspension [6][8]. - If the downward trend continues, the index may enter a technical bear market [6]. MSCI Concerns - MSCI has raised alarms about the low free float of stocks in Indonesia, with over 200 components having a free float ratio below 15%, which distorts the index and poses manipulation risks [7][10]. - MSCI has paused index adjustments and frozen new component stocks until regulatory issues regarding concentrated ownership are addressed [6][7]. Investor Sentiment - Following MSCI's warning, foreign investors have become increasingly cautious, with net sales of Indonesian stocks reaching $1.92 million for the week ending January 23, marking the first outflow in 16 weeks [8][9]. - On January 27, foreign investors sold a record net amount of 6.2 trillion Indonesian rupiah (approximately $3.71 million) in a single day [9]. Regulatory Response - The Indonesian Stock Exchange has acknowledged MSCI's feedback and is committed to enhancing market data transparency and reliability [9][10]. - Plans are underway to increase the minimum free float ratio from 7.5% to between 10% and 15%, with a long-term goal of 25% [10]. Future Outlook - Goldman Sachs and UBS have downgraded their ratings for the Jakarta Composite Index, with Goldman Sachs warning of potential capital outflows exceeding $13 billion under extreme conditions [6][9]. - The Indonesian financial authorities are preparing stricter rules for small business listings to improve market conditions [10].

Group 1 - The meeting between Indonesia's Finance Minister and the Central Bank Governor focused on coordinating fiscal and monetary policies to stabilize the exchange rate and financial markets amid the weakening of the Indonesian Rupiah against the US dollar, nearing 1:17000 [1] - The Finance Minister emphasized the importance of strengthening fiscal and economic fundamentals, while the Central Bank will take necessary measures to stabilize the Rupiah, highlighting that exchange rate stability falls under the Central Bank's responsibilities [1] - The Central Bank Governor noted that the Rupiah's performance is influenced by both global and domestic factors, including geopolitical tensions, US tariffs, high US Treasury yields, and reduced likelihood of Federal Reserve rate cuts [1] Group 2 - The Central Bank plans to increase intervention efforts to stabilize the market and strengthen the Rupiah to reflect economic fundamentals, with expectations of good economic performance supported by domestic demand and government stimulus measures [1] - The Central Bank decided to maintain the benchmark interest rate at 4.75% for the fourth consecutive time, aligning with market expectations, while projecting inflation to remain within the target range of 2.5%±1% in 2026 [1] - Since September 2024, the Central Bank has cut interest rates by a total of 150 basis points, bringing rates to the lowest level since October 2022, while maintaining GDP growth forecasts for 2025 between 4.7% and 5.5% [2]

Core Viewpoint - Citigroup indicates that the Indonesian Rupiah faces further depreciation risks due to increased imports ahead of Ramadan, seasonal dividend repatriation, and ongoing fiscal concerns [1] Group 1 - Citigroup previously projected that the USD/IDR exchange rate would rise to 17,200 within the next six to twelve months [1] - The risk of the exchange rate surpassing this level has significantly increased according to strategists Rohit Garg and Gordon Goh [1]

Group 1 - Berenberg Bank's chief economist indicates that the U.S. government's attempt to forcibly purchase Greenland and threaten tariffs on eight countries has shattered market expectations for a tariff easing in 2026, potentially leading to a consumer price increase of up to 0.15% in the U.S. if the U.S.-EU tariff agreement is abolished [1] - Apex Securities analysts highlight Malaysia's strong domestic demand, predicting a solid economic growth support in 2026, with a GDP growth forecast of 4.3% driven by robust service sector performance, government tourism initiatives, and ongoing policy support [1] - Westpac Bank notes that tensions between the U.S. and Europe over Greenland are exacerbating downward pressure on the dollar and reigniting discussions on "de-dollarization," emphasizing the geopolitical risks associated with the U.S.'s significant international net liabilities [2] Group 2 - Mitsubishi UFJ Financial Group warns that the Indonesian rupiah is under increasing depreciation pressure due to fiscal deficits nearing legal limits and weak tax revenues, predicting it may fall to 17,000 per dollar by Q1 2026 [3] - Barclays analysts forecast that the Indonesian rupiah could further decline to a historical low of 17,300 per dollar in 2026, reflecting deep market concerns over Indonesia's fiscal sustainability [3] - BlackRock reports that European institutional investors are accelerating their investments in private markets to navigate a new landscape characterized by increased volatility and changing stock-bond correlations, with EMEA clients contributing approximately 35% to BlackRock's global private fundraising in 2025, which surged over 50% year-on-year [3]

Group 1 - The core message from Goldman Sachs is that while the dominance of the US dollar is weakening, it is not collapsing yet, with a projected slow decline influenced by global growth and balanced asset returns [1][2] - Goldman Sachs predicts that the dollar will experience a "slow downward process," driven by strong global growth, despite the dollar being overvalued by approximately 15% according to their GSDEER model [1][2] - The report highlights that the most significant risks to the dollar's value may arise from structural changes in capital markets rather than traditional macroeconomic data [1][2] Group 2 - The outlook for the euro is that it is nearing "fair value" against the dollar, with further appreciation likely driven by the dollar's weakness rather than explosive growth in the Eurozone [3] - The British pound is identified as a "laggard" among G10 currencies, facing structural overvaluation and lacking fundamental support due to pressures from fiscal tightening and a weak domestic economic outlook [3] - Goldman Sachs forecasts that the Bank of England will implement more aggressive rate cuts than the market expects, which will negatively impact the pound's performance compared to its European counterparts [3] Group 3 - In Asia, Goldman Sachs sees opportunities in low-yield currencies closely tied to the technology supply chain, such as the South Korean won, New Taiwan dollar, and Malaysian ringgit, which are expected to outperform higher-yield currencies like the Indonesian rupiah and Philippine peso [5] - The South Korean won is particularly favored due to expected inflows from the inclusion in the FTSE World Government Bond Index and the resumption of foreign exchange hedging by the National Pension Service [5] - For emerging markets, Goldman Sachs recommends focusing on currencies with improving fundamentals and attractive valuations, such as the Brazilian real and Colombian peso, which offer significant carry trade potential despite political uncertainties [6]

Core Viewpoint - The Indonesian central bank is intervening in the foreign exchange market due to ongoing concerns about the country's fiscal health, which has led the Indonesian rupiah to approach historical lows [1] Group 1: Central Bank Actions - The central bank is actively taking measures in the market to ensure that the exchange rate fluctuates in line with fundamentals and healthy market mechanisms [1] - The central bank's executive director, Erwin Hutahepy, emphasized the commitment to optimizing market-oriented monetary policy tools to enhance the effectiveness of monetary policy transmission and maintain adequate liquidity [1] Group 2: Currency Performance - The Indonesian rupiah is currently only about 0.5% away from the historical low reached in April of the previous year [1] - Concerns regarding Indonesia's fiscal health have resurfaced, contributing to the pressure on the currency [1]

Group 1 - HSBC expresses a positive outlook on Chinese assets, recommending investors to increase holdings in mainland China and Hong Kong stocks by 2026 and to establish long positions in the renminbi [1] - The bank suggests a shift in investment focus towards assets supported by domestic demand amid potential market volatility, particularly favoring stocks in China, Hong Kong, India, and Indonesia [2] - HSBC advises selling Swiss francs and buying offshore renminbi, anticipating a gradual appreciation of the renminbi due to China's industrial upgrades and technological self-sufficiency [1][3] Group 2 - HSBC recommends an overweight position in stocks from mainland China, Hong Kong, India, and Indonesia, while advising a reduction in exposure to the crowded South Korean market due to concerns over the sustainability of AI-driven growth [2] - The bank highlights the potential for interest rate cuts by some Asian central banks to support local stock markets, although the pace of rate cuts by the Federal Reserve may limit this space [4] - In the fixed income sector, HSBC favors a curve steepening strategy and is optimistic about bonds from India and the Philippines, while being cautious about Thailand and Indonesia [4]

Core Viewpoint - The Indonesian rupiah weakened against the US dollar, reversing a three-day upward trend, amid expectations of potential domestic interest rate cuts by the central bank [1] Group 1: Currency Performance - On January 2, the exchange rate for the Indonesian rupiah was approximately 16,720 rupiah per US dollar, marking a decline after a period of appreciation [1] - The rupiah depreciated about 4% throughout 2025, making it one of the weakest currencies in Asia [1] Group 2: Monetary Policy - The Bank of Indonesia maintained the key interest rate at 4.75% during its third consecutive meeting in December, following a cumulative rate cut of 150 basis points from September 2024 to September 2025 [1] - There is potential for further monetary easing this year, as indicated by the central bank, in response to moderate inflation and the need to support economic growth following disasters in Sumatra [1] Group 3: Inflation and Market Sentiment - Market focus is shifting towards the upcoming December inflation data, which, despite remaining within the central bank's target range of 1.5% to 3.5%, has recently hovered near an 18-month high [1] - The global dollar index fell to around 98.2, reflecting a 9% decline over 2025, influenced by uncertainties in tariff policies, expectations of Federal Reserve rate cuts, and fiscal concerns [1]