Asian Currencies Gain Ground Against USD on Bullish Sentiment

Asian currencies showed renewed strength against the U.S. dollar on Monday, as market sentiment shifted in favor of the yuan, Korean won, and Taiwan dollar. The move follows the release of a recent Reuters poll, which signaled growing bullishness among traders and analysts despite ongoing trade uncertainties and geopolitical concerns.

Yuan, Won, Taiwan Dollar Lead Regional Rally

The Chinese yuan led gains, supported by improving confidence in Beijing’s policy direction and stabilizing economic indicators. Analysts noted that while China's long-term growth trajectory remains under pressure, recent data releases—including industrial output and retail figures—have helped ease immediate concerns. Additionally, the People’s Bank of China has kept the yuan’s trading band relatively stable, sending a signal of support to currency markets.

The South Korean won also posted modest gains, buoyed by strong export performance and the recent strength in global semiconductor demand, which plays a critical role in the country’s trade profile. Market participants are also anticipating continued foreign inflows, particularly into equities and bonds, which could offer further support to the won in the near term.

Meanwhile, the Taiwan dollar gained on the back of increased investor interest in the tech-heavy Taiwanese economy. With AI and chip-related exports continuing to rise, the currency has benefitted from renewed optimism, even as geopolitical risks surrounding cross-strait relations linger in the background.

Reuters Poll Signals Shift in Sentiment

The Reuters poll of currency strategists and traders reflected an improving outlook for select Asian currencies, despite persistent headwinds from global trade tensions and an uneven recovery in major economies. According to the survey, participants see a narrowing gap between the U.S. and Asian economic performance in the second half of the year—helping tilt sentiment toward regional currencies.

The poll also indicated a reduced likelihood of aggressive U.S. interest rate hikes going forward, which could reduce dollar strength and improve capital flows into emerging Asian markets. With the Federal Reserve signaling a more cautious, data-driven approach, traders are reassessing the risk-reward dynamics across global currency markets.

Although the dollar remains firm against some emerging-market peers, the shift in sentiment toward Asia’s more resilient economies is becoming increasingly clear.

Outlook: Watch for Trade and Policy Triggers

Despite the current momentum, currency analysts caution that the rally in Asian currencies could face tests in the weeks ahead. Key risk events—including U.S. inflation data, Chinese policy announcements, and developments in global trade negotiations—could sway market direction.

Investors will also be closely monitoring central bank actions across Asia, as authorities balance currency stability with growth support. Any surprises in monetary policy, particularly from the People’s Bank of China or the Bank of Korea, could alter the path of appreciation.

Nonetheless, with bullish positioning gaining traction and macroeconomic fundamentals slowly firming up across the region, the near-term bias for the yuan, won, and Taiwan dollar appears tilted to the upside.

For now, the regional currency rebound serves as a signal that investors are selectively rotating into markets they view as better positioned to weather global headwinds—especially amid signs of easing inflation, stable monetary policy, and steady trade flows.

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