China hosts largest ever SCO summit as South Caucasus draws attention
The 25th Shanghai Cooperation Organization summit began in Tianjin on 31 August, marking the largest gathering in the bloc’s history, with China dee...
A dramatic surge in Asian currencies is signaling a shift in global financial flows, with analysts warning of a potential erosion of long-standing U.S. dollar supremacy.
The Taiwan dollar’s record-breaking rally on Friday and Monday has triggered a broader appreciation across the region, driving up the Singapore dollar, Chinese yuan, South Korean won, Malaysian ringgit, Thai baht, and the Hong Kong dollar.
The sharp moves are being interpreted by investors as the early signs of a structural change in currency dynamics, likened to an “Asian crisis in reverse.” Unlike the capital flight of the 1997–98 financial crisis, money is now flowing into Asia and out of U.S. dollar assets.
“This has a very sort of Asian-crisis-in-reverse feel to it,” said Louis-Vincent Gave, founding partner of Gavekal Research, noting the rapid pace and scale of the shift.
For decades, Asian economies — particularly China, Taiwan, South Korea, and Singapore — accumulated U.S. dollar reserves from trade surpluses and recycled them into U.S. Treasuries. That pattern appears to be breaking, driven in part by investor concerns about the trajectory of U.S. monetary policy, economic stability, and President Donald Trump’s tariff escalation, which has altered the calculus for exporters.
Trump’s April 2 announcement of sweeping new tariffs, dubbed “Liberation Day,” has cast a shadow over U.S. asset returns and weakened confidence in the dollar. Some in the markets have even speculated about an informal “Mar-a-Lago agreement”—a coordinated move to weaken the dollar—though Taiwan’s Office of Trade Negotiations has denied any such discussions during recent talks in Washington.
While Tuesday brought some calm after the Taiwan dollar’s 10% two-day surge, volatility remained high. Traders across the region reported heavy volumes and difficulties executing trades, suggesting strong momentum behind the sell-off in U.S. dollars. Hong Kong’s dollar approached the strong end of its peg, and the Singapore dollar reached near decade highs.
“Trump’s policies have weakened the market’s confidence in the performance of U.S. dollar assets,” said Gary Ng, senior economist at Natixis. Morgan Stanley’s Robin Xing echoed that sentiment, calling the tariff decision a "wake-up call" for investors.
Asia’s largest foreign currency reserves remain massive. China alone holds nearly $960 billion in foreign currency deposits, the highest in almost three years. In tandem, signs are emerging that institutional investors — including pension funds and insurers — are scaling back unhedged positions in U.S. assets. UBS estimates that Taiwanese insurers alone could offload up to $70 billion in U.S. dollar exposure if they return to pre-2021 hedging levels.
Adding to the signal, Hong Kong’s de-facto central bank announced it has been reducing U.S. Treasury holdings and increasing its exposure to non-dollar assets.
A long-favored “free-money” trade that profited from buying U.S. dollars in Hong Kong dollar forwards is now being rapidly unwound. “Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding,” said Mukesh Dave, chief investment officer at Aravali Asset Management in Singapore.
Meanwhile, bond market rallies across Asia suggest capital is repatriating. “Repatriation talk is becoming reality,” said Parisha Saimbi, strategist at BNP Paribas, noting a growing shift away from the dollar.
Taiwan's central bank has pledged to stabilize the local currency, and even the island's president publicly insisted that the exchange rate was not part of trade negotiations. Nonetheless, market signals appear clear.
“USD/TWD is a canary in the coal mine,” said Brent Donnelly, president at Spectra Markets. “Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning.”
A powerful eruption at Japan’s Shinmoedake volcano sent an ash plume more than 3,000 metres high on Sunday morning, prompting safety warnings from authorities.
According to the German Research Centre for Geosciences (GFZ), a magnitude 5.7 earthquake struck the Oaxaca region of Mexico on Saturday.
The UK is gearing up for Exercise Pegasus 2025, its largest pandemic readiness test since COVID-19. Running from September to November, this full-scale simulation will challenge the country's response to a fast-moving respiratory outbreak.
A Polish Air Force pilot was killed on Thursday when an F-16 fighter jet crashed during a training flight ahead of the 2025 Radom International Air Show.
Malaysia marked its 68th National Day on Sunday with a vibrant parade in Putrajaya attended by over 14,000 participants and the country’s top leadership.
Norway will purchase a fleet of British-built frigates to reinforce its naval strength, the government confirmed on Sunday. The move marks a decisive step in what is expected to be the country’s largest-ever military procurement and a significant boost to NATO’s northern maritime defences.
Indonesian President Prabowo Subianto on Saturday cancelled a planned visit to China as nationwide protests spread beyond Jakarta, with several regional parliament buildings set on fire.
Start your day informed with AnewZ Morning Brief: here are the top news stories for the 31th of August, covering the latest developments you need to know.
Russian President Vladimir Putin arrived in the northern Chinese port city of Tianjin on Sunday for a regional security summit, Chinese and Russian state media reported.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment