Asian Currencies Crushed by Dollar: Rupiah Falls, But Ringgit Stands Firm

The majority of Asian currencies were pressured by the United States (US) dollar at the close of trading on Friday (26/6/2026), as the US dollar index strengthened and remained at elevated levels. According to Refinitiv data covering 10 Asian currencies, eight weakened against the greenback, one strengthened, and one was stagnant. The rupiah was among those under significant pressure, with the Garuda currency weakening 0.36% to Rp 17,905 per US dollar, edging it closer to the psychological level of Rp 18,000 per US dollar. The deepest pressure was felt by the Thai baht, which slumped 1.46% to THB 33.31 per US dollar, making it one of the worst performers. The Philippine peso followed with a depreciation of 0.96% to PHP 61.23 per US dollar. The Taiwan dollar also fell into the red, dropping 0.55% to TWD 31.85 per US dollar. The Singapore dollar weakened 0.22% to SGD 1.296 per US dollar, while the Chinese yuan corrected 0.43% to CNY 6.798 per US dollar. The Japanese yen also depreciated 0.28% to JPY 161.73 per US dollar, while the Vietnamese dong was stagnant at VND 26,245 per US dollar. In contrast, the Malaysian ringgit posted the sharpest gain in Asia, surging 1.19% to MYR 4.005 per US dollar. Meanwhile, the US dollar index (DXY) was observed edging down slightly by 0.07% to 101.357 in yesterday’s trading, though this minor dip did not dislodge the greenback from its high territory. The DXY had previously pulled away from its strongest level since May 2025, but the dollar remains on track for its first two-week winning streak since the Middle East conflict erupted in late February. The dollar’s recent strength continues to be influenced by expectations of tighter US monetary policy. Following last week’s FOMC meeting, markets began to perceive a divergence in policy direction between the US and other regions, particularly Europe. Analysts at Capital Economics assessed that the dollar had corrected slightly after a sharp post-FOMC surge, but they believe the monetary policy divergence between the US and Europe could still open room for further greenback gains in the second half of 2026. On the data front, US inflation remains a market focus. The Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose 4.1% year-on-year in May 2026, in line with economist expectations and influenced by a surge in energy prices due to the Middle East conflict. Several Fed officials offered mixed signals. Chicago Fed President Austan Goolsbee noted a glimmer of hope in services inflation but maintained that core price pressures remain too high and are moving in an uncomfortable direction. New York Fed President John Williams stated that inflationary pressures are likely to ease this year, but the current level of inflation is still too high. These comments slightly dampened market expectations for overly rapid interest rate hikes. According to the CME FedWatch Tool, markets are now pricing in a 69% probability that the Fed will hold rates steady at the meeting ending 29 July, up from 65.8% a day earlier.