US Dollar Outlook: SGD, THB, IDR, PHP May Fall on Capital Flight, Covid Risks

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US Dollar, Singapore Dollar, Thai Baht, Indonesian Rupiah, Philippine Peso, ASEAN, Fundamental Analysis – Talking Points

  • The US Dollar extended gains against ASEAN currencies as Covid cases swell
  • Capital flight woes upside factor: USD/SGD, USD/THB, USD/IDR, USD/PHP
  • ASEAN event risks include the Bank of Indonesia and Singapore inflation data

US Dollar ASEAN Weekly Recap

The US Dollar extended gains against ASEAN currencies this past week, including versus the Singapore Dollar, Thai Baht, Indonesian Rupiah and Philippine Peso – as expected. My ASEAN-based US Dollar index touched its highest since early November 2020 – see chart at the end of the article. The pickup in the Greenback has been occurring amid rising Covid cases in the ASEAN region, which have been exponentially picking up pace – see immediate chart below.

Covid Cases in Singapore, Thailand, Indonesia, Philippines – Averaged

US Dollar Outlook: SGD, THB, IDR, PHP May Fall on Capital Flight, Covid Risks

Chart Created Using TradingView

Key ASEAN Event Risks – Swelling Covid Cases Fueling Capital Flight

The focus for USD/SGD, USD/THB, USD/IDR and USD/PHP could remain on regional developments, especially if Covid cases continue expanding. That is because it has been fueling capital outflows from the region. On the chart below, an ASEAN-based ETF averaging indices in Singapore, Thailand, Indonesia and the Philippines touched its lowest since November 2020.

This deterioration in risk appetite doesn’t bode well for a lot of these sentiment-sensitive Emerging Market currencies. When investors seek safety and prioritize preserving capital, they frequently convert their holdings back into US Dollars. Still-dovish commentary from the Federal Reserve this past week may be acting as a cushion though. Chair Jerome Powell brushed aside this past week’s elevated inflation report.

The external economic event docket is fairly quiet in the week ahead, further placing the focus for ASEAN currencies on regional risk. Singapore virus cases hit their highest in 15 months. Daily Thai cases have been clocking in at levels that surpass total infections in 2020 as deaths hit a grim record high. This is threatening the outlook for local growth given the nation’s dependence on tourism if reopenings have to be delayed.

Indonesia recently topped 50k daily cases, a record. Meanwhile, the United States is planning on sending about 3.2 million Johnson and Johnson vaccines to the Philippines. This is as the nation detected its first local cases of the more infectious Delta coronavirus variant. With that in mind, the US Dollar may remain on the offense against ASEAN currencies in the week ahead.

ASEAN, South Asia Economic Data – Bank of Indonesia, Singapore CPI

Focusing on ASEAN economic data, the Bank of Indonesia is on tap for the Rupiah. On Thursday the central bank is expected to leave its benchmark 7-day reverse repo rate unchanged at 3.5%. Governor Perry Warjiyo opened the door to a hike later this year. So that could be keeping USD/IDR from rising aggressively. But, rising Covid cases could revise the economic outlook, impacting monetary policy. Singapore CPI is also on tap to wrap up the week for USD/SGD.

Check out the DailyFX Economic Calendar for ASEAN and global data updates!

On July 16th, the 20-day rolling correlation coefficient between my ASEAN-based US Dollar index and my ASEAN ETF index changed to -0.96 from -0.93 one week ago. Values closer to 1 indicate an increasingly inverse relationship, though it is important to recognize that correlation does not imply causation.

ASEAN-Based USD Index Versus ASEAN ETF Index – Daily Chart

US Dollar Outlook: SGD, THB, IDR, PHP May Fall on Capital Flight, Covid Risks

Chart Created Using TradingView

*ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/THB and USD/PHP

— Written by Daniel Dubrovsky, Strategist for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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