# Asian foreign exchange markets remain under pressure as rising US yields weigh on regional currencies

- Link: https://www.thailand-business-news.com/currencies/334606-asian-foreign-exchange-markets-remain-under-pressure-as-rising-us-yields-weigh-on-regional-currencies
- Published: 2026-10-19T13:41:12+07:00
- Author: Chloe Zhou

MUFG reports strong US Dollar, elevated Treasury yields, and high oil prices pressuring
Asian currencies. Indian Rupee, Indonesian Rupiah, and Thai Baht are most vulnerable.
RBI’s FX measures may help India. Maintains end-2026 forecasts: USD/IDR at 18,350
and USD/THB at 34.10.

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## Key Points

**Market Pressures**
 • Strong US Dollar, elevated Treasury yields, and high oil
prices are depreciating Asian currencies • Indian Rupee, Indonesian Rupiah, and 
Thai Baht face particular vulnerability • Regional FX experiencing significant depreciation
pressure across multiple fronts

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**Policy Responses & Headwinds**
 • RBI’s FX measures aim to curb rupee speculation
and temper INR downside pressure • Rising crude prices remain a persistent headwind
for Asian economies • Elevated US yields reduce appeal of Indonesian assets, triggering
foreign portfolio outflows

**Forecasts & Outlook**
 • MUFG maintains end-2026 USD/IDR forecast at 18,350 • 
USD/THB forecast held at 34.10 for end-2026 • Thai economy particularly stressed
by stronger dollar and oil prices affecting energy import costs

## Asian Currency Market Analysis

### Headwinds Pressuring Asian Foreign Exchange Markets

**MUFG identifies multiple macroeconomic factors creating significant depreciation
pressure across Asian currencies.** A combination of firm US dollar strength, elevated
US Treasury yields, and rising oil prices are collectively weighing on regional 
foreign exchange markets. Among Asian currencies, the **Indian Rupee (INR), Indonesian
Rupiah (IDR), and Thai Baht (THB) are considered particularly vulnerable** to these
external pressures. These three currencies face intensified downside risks compared
to other regional peers, making them susceptible to further depreciation in the 
near term. The convergence of these factors reflects broader global economic conditions
that disproportionately affect currencies in emerging Asian markets, which remain
sensitive to capital flows and commodity price movements.

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### Regional Currency-Specific Vulnerabilities and Policy Responses

**The Indian Rupee faces headwinds despite Reserve Bank of India (RBI) interventions
designed to stabilize the currency.** The RBI has implemented recent foreign exchange
measures aimed at curbing speculative pressure on the rupee, which may help moderate
further depreciation. However, elevated crude oil prices continue to pose structural
challenges to the Indian economy. In Indonesia, the situation is similarly complex,
as **elevated US Treasury yields reduce the relative attractiveness of Indonesian
assets and increase sensitivity to foreign portfolio outflows.** MUFG maintains 
its end-2026 forecast for USD/IDR at 18,350, reflecting expectations of continued
pressure on the rupiah despite potential stabilizing factors.

### Thailand’s Energy Import Challenges and Currency Outlook

**Thailand’s Baht remains exposed to the dual pressures of stronger US dollar dynamics
and higher oil prices.** These combined forces create structural vulnerabilities,
particularly by raising Thailand’s energy import costs and weakening the nation’s
terms of trade. As an energy-importing economy, Thailand experiences compounded 
negative effects from oil price increases paired with currency depreciation. **MUFG
maintains its end-2026 USD/THB forecast at 34.10**, reflecting expectations of ongoing
baht weakness driven by these external factors. This forecast suggests that without
significant shifts in global oil markets or US monetary policy, the Thai currency
will continue facing depreciation pressure throughout the forecast period, affecting
both importers and the broader economy.

**Source** : [Asian FX: Higher US yields keep regional currencies under pressure](https://www.fxstreet.com/news/asian-fx-higher-us-yields-keep-regional-currencies-under-pressure-mufg-202610151142)