OCBC has adjusted its Asian foreign exchange projections to a slightly firmer profile versus the US Dollar (USD), with larger upgrades pencilled in for the Korean won (KRW) and Malaysian ringgit (MYR). The changes reflect recent market moves and shifts in underlying FX drivers over the past few weeks, and incorporate stronger Korean domestic fundamentals alongside improved exporter flows and reduced concerns about capital outflows; in Malaysia, the bank points to resilient growth, supportive external balances, fading political noise and earlier steps aimed at encouraging FX inflows.
The bank continues to expect performance to diverge across Asian currencies rather than move in a single direction. It frames the likely pace and extent of gains as contingent on country-level fundamentals, monetary policy settings and fund flows, and also on external variables such as changes in yields and oil price swings. The article was produced with the assistance of an artificial intelligence tool and reviewed by an editor.
Derivatives Strategies for Stronger MYR and KRW
We believe derivative traders should position for a stronger Malaysian Ringgit (MYR) and Korean Won (KRW) against the US Dollar in the coming weeks. Instead of treating Asian currencies as a single block, we recommend using tailored options and forward contracts to capture these country-specific gains. This selective approach allows us to exploit the shifting macroeconomic drivers we are currently observing across the region.
Malaysia’s economic momentum supports this view, with recent data showing solid GDP growth holding steady around 5.0% and strong foreign direct investment inflows. Furthermore, coordinated efforts by Bank Negara Malaysia to encourage state-backed firms to repatriate foreign earnings have successfully driven the Ringgit to trade near its strongest levels in months. Traders can capitalize on this stability by selling USD/MYR upside call options to collect premium while expecting the Ringgit to maintain its upward trajectory.
For South Korea, a sharp rebound in semiconductor exports, which surged over 20% year-on-year in recent months, has significantly improved the nation’s trade balance. This export-led recovery, combined with a decline in domestic capital outflows, is providing solid fundamental backing for the Won. We suggest buying short-term USD/KRW put options to leverage this building momentum as exporter flows continue to clear the market.
Relative Value Trades and Isolating Local Strengths
Because we expect a highly fragmented performance across Asian FX, traders should avoid broad-basket emerging market proxies and focus on relative value pairs instead. External factors, such as volatile Brent crude prices fluctuating around $75 to $80 a barrel and shifting global bond yields, will create divergent paths for energy exporters like Malaysia compared to energy importers. By structuring cross-currency trades—such as long MYR against weaker regional peers—we can better isolate these localized strengths.
