Asia FX Talking: China delivers controlled CNY appreciation in Daily Currencies Ratings 15/01/2026 USD/CNY: Market upbeat on CNY appreciation prospects to start the year • The Chinese yuan strengthened by more than usual over the past month, with December 2025 seeing the largest monthly appreciation for the CNY against the USD since August 2024. USD/CNY has been in a 6.98-7.07 range over the past month. • The People’s Bank of China’s fixings have now moved from supporting a stronger CNY towards pushing back against the pace of appreciation. US-China yield spreads have narrowed after the Fed rate cut, and with the Fed set to ease faster than the PBoC, this trend should continue, albeit likely at a slower pace. • With a faster pace of appreciation in December, we accelerate our timeline for appreciation, and adjust our 2026 fluctuation band forecast to 6.85-7.25. Risks still look balanced towards CNY appreciation as yield spreads narrow further, and as the current account surplus balloons. USD/KRW: The KRW to be range-bound around 1450 • Thanks to various FX stabilisation measures by the authorities, USD/KRW levelled down from near 1,500 to 1,430 by the year end. Yet, underlying strong USD demand persists and USD/KRW has climbed back to around 1,470. • The Bank of Korea is likely to keep its policy rate at 2.5% in January due to inflation risks from a weak Korean won and the continued rise in Seoul housing prices. • Robust global chip demand may attract more foreign capital to the local equity market but heightened geopolitical risk is expected to keep the USD/KRW around 1,450 in near term. USD/IDR: Fiscal concerns could keep rupiah under pressure • A combination of weaker trade performance, widening rate differentials, and fiscal concerns drove the Indonesian rupiah lower against the US dollar in 2025, in line with our expectations. IDR ended the year as the region’s second-worst performer, depreciating 3.5%. vs the USD. • Persistent worries over fiscal sustainability and lack of policy clarity weighed further on sentiment in 4Q. Foreign investor outflows from government bonds accelerated, totalling USD $1.7bn, as concerns over a rising fiscal deficit deepened – pushing foreign holdings of Indonesian bonds to decade lows. • Looking ahead, subdued GDP growth and sluggish government revenues will continue to pressure the currency. We are adding further weakness to our already weak-IDR profile, given investor unease which is likely to keep FII inflows muted. USD/INR: Sharp fall in REER should limit further downside • The Indian rupee ended last year as Asia’s weakest currency, pressured by a widening trade deficit which was driven by elevated tariffs and increased gold imports. Portfolio outflows from equities accelerated in December amid muted earnings and stretched valuations. • Overall, the central bank’s assessment of the growth-inflation trade-off aligns with ours, suggesting scope for further policy easing. However, INR weakness has eroded currency-adjusted returns for bond investors, prompting foreign institutional investor outflows from debt markets too. • We expect India to eventually secure lower tariff rates, which should help narrow the trade deficit and support the rupee over the next three to six months. From a valuation standpoint, the sharp decline in INR’s real effective exchange rate should also limit further downside. USD/PHP: Fresh concerns on growth hit the local currency • Concerns over softer GDP growth have weighed o