Emerging Market Currencies: East Asian Currency Trends to Watch

■ While many emerging market currencies remained strong in November, East Asian currencies stood out because of their weakness.  
■ It's worth noting whether the weakening of East Asian currencies reflects increasing geopolitical risks, as it could also influence next year's trend. 
 
   This article summarizes recent movements of major emerging market currencies, covering 11 economies including Asian countries (China, South Korea, Taiwan, Thailand, Indonesia), Central and South America (Brazil, Mexico), Eastern Europe (Hungary, Czech Republic), and other significant nations (South Africa, Turkey). The data is based on exchange rate changes against the US dollar at the end of November. In November, the Hungarian forint (+1.9%) led gains among 7 currencies, while the Turkish lira (-1.1%), New Taiwan dollar (-2.2%), and South Korean won (-2.9%) were among the 4 currencies that declined. 
 
   Despite most major emerging-market currencies remaining strong, East Asian currencies weakened again after their recovery from July to September. Looking at the second half of the year from the end of June to the end of November, the New Taiwan Dollar (NTD) declined by 6.1%, and the Korean Won by 8.7%, reversing their strong first-half performances. One reason for their weakness from July to September was the deadlock in trade talks with the US. However, Taiwan's October exports increased 49.7% year-on-year to US$61.8 billion, and South Korea's November exports rose 8.4% year-on-year to US$61.04 billion, driven by strong demand for high-tech products and supporting trade between the two countries. Concerns about the negative impacts of US tariff policies have eased somewhat. Although both Taiwan and South Korea experienced capital outflows from overseas assets, some market experts expect the Central Banks of Taiwan and Korea to intervene by selling US dollars, or for the National Pension Service of Korea (NPS) to sell US dollars. Currently, there is no sign of increased risk of currency depreciation for either country. 
 
   In contrast, the Chinese Yuan has remained strong. The renminbi appreciated by 1.2% in the second half of the year, ranking third among major emerging market currencies after the South African rand, Mexican peso, and Brazilian real. While the renminbi operates under a managed floating exchange rate system, its strength in the second half was driven by multiple delays in tariff hikes by both the US and China, along with ongoing efforts by Chinese authorities to guide its appreciation. Meanwhile, the Japanese yen depreciated by 8.4% in the second half of the year, creating a sharp contrast with the weakness seen in the New Taiwan dollar and South Korean won. 
 
   Whether these recent movements in East Asian currencies indicate rising geopolitical risks warrants continued attention. Concerns about a prolonged Sino-Japanese conflict emerging in November might also be a contributing factor. If financial markets start to recognize the growing geopolitical risks in East Asia, currencies like the yen, New Taiwan dollar, and South Korean won could face depreciation pressures in 2026, which might affect their future price trends.