Photographer: SeongJoon Cho/Bloomberg

In Currency Battle Between Asian Export Giants, Taiwan is Winning

  • South Korean currency is biggest gainer over three months
  • Yuanta is watching Taiwan’s central bank, FX correlations

There’s always competitive tension between Asia’s export giants -- and at the moment, it’s the won’s surge that has people talking.

Analysts at Yuanta Securities Co. in Taipei concluded that policy makers in Seoul have lost their grip on the South Korean currency, according to a note dated Friday, after the won strengthened past 1,100 per dollar for the first time in a year. The currency is also trading at a 12-month high versus the Taiwan dollar. The Yuanta strategists are monitoring the correlation between the Asian exchange rates, and keeping a close eye out for any signs of a reaction from Taiwan’s central bank, they wrote.

The won has soared almost 4 percent against the U.S. dollar in the past three months, more than any other major currency, spurring a Korean central bank official to say Friday that the won has appreciated "fast in a short time" and that the foreign-exchange authority is closely monitoring markets. Taiwan’s currency, by contrast, has held close to 30 per dollar since April.

Others have been looking at how South Korea’s interest-rate trajectory will influence Taiwan’s. Barclays Plc expects Taiwan to make a moderate increase in borrowing costs in the second quarter of 2018, partly because other central banks including the Bank of Korea are getting more hawkish, economist Angela Hsieh said by phone on Friday.

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