A powerful wave of dollar selling across Asia has shaken global currency markets, led by Taiwan’s explosive 10% rally in just two days. The movement is now reverberating through South Korea, Singapore, China, Malaysia, and Hong Kong—suggesting a broad shift in investor sentiment.
Analysts are calling the trend an “Asian crisis in reverse.” In contrast to the capital flight seen during the 1997–98 financial crisis, capital is now flowing back into Asia—marking a stark reversal in global money flows.
Trump Tariffs Erode Faith
Experts blame U.S. President Donald Trump ’s aggressive tariff regime for destabilizing trust in U.S. economic prospects. Exporters face shrinking U.S. demand, and fears of an economic slowdown are making dollar-based assets look increasingly unattractive.
Traders in Taiwan and elsewhere report difficulty executing dollar trades, hinting at central bank involvement. Hong Kong’s de-facto central bank has reduced its U.S. Treasury exposure, while Singapore and South Korea also see heavy buying of local currencies.
Repatriation and De-Dollarization
Asian exporters and long-only funds appear to be repatriating capital, driving local bond markets higher. UBS estimates Taiwanese insurers could alone offload $70 billion in U.S. assets by rebalancing their currency hedges.
“Gift That Keeps Giving” Trade Unwinds
A long-popular arbitrage play—buying cheap dollars in the Hong Kong forwards market—has started unraveling. Macro funds are rushing to unwind positions as exchange rate expectations shift rapidly.
Goldman Sachs reports investor clients have flipped from shorting the yuan to shorting the dollar. With hedging costs rising and U.S. returns in question, Asia’s capital seems to be turning inward.
Though Taiwan’s central bank and government insist the currency rally is not tied to trade negotiations, analysts say the message is clear: The U.S. dollar’s supremacy as the go-to safe haven is facing its most serious challenge in decades.
Read This Also: BSE Sensex Slips 155.77 Points, Nifty 50 Slips Below 24,400
