Asian currencies are likely to appreciate against the US dollar in the long term, according to a recent report by Jefferies.
The report highlighted that the gross national savings in emerging Asian countries are significantly higher than those in developed G7 nations, giving Asian economies a strong foundation for currency strength.
It said, “The most likely currency bloc to enjoy long-term appreciation against the US dollar remains Asian currencies in what amounts to a reversal of the dynamic triggered by the Asian Crisis nearly 30 years ago.”
The report noted that this trend marks a reversal of the currency dynamic that was triggered by the Asian Financial Crisis nearly 30 years ago.
This shift is happening not only due to changes in US trade policies under the Trump administration but also because of the financial strength seen in many Asian countries.
The Trump administration’s focus on targeting mercantilist economies has also played a role. Taiwan, the report noted, is seen as the leading practitioner of mercantilism.
However, beyond trade policies, the report emphasized that Asia as a region has the savings needed to support currency appreciation.
Jefferies mentioned that in 2024, gross national savings in emerging Asia, which includes China but excludes Taiwan and Korea, stood at 39 per cent of GDP. In comparison, G7 countries had savings of 20.1 per cent of GDP, and another unnamed group had only 17.3 per cent.
Back in the US, the report added that the risk of a near-term recession has reduced significantly. This is mainly due to the Trump administration stepping back from its earlier tariff plans, which could have led to higher costs for ordinary Americans.
Such tariffs would have acted like a regressive tax in a country already dealing with severe income inequality.
According to 2022 data from the Internal Revenue Service (IRS), the top 1 per cent of Americans earned 22.4 per cent of total gross individual income and paid 40.4 per cent of all income taxes. The top 10 per cent accounted for nearly half of the income (49.4 per cent) and paid 72 per cent of the taxes.
In contrast, the bottom 50 per cent of Americans earned only 11.5 per cent of the income and contributed just 3 per cent to income tax collections. In 2023, individual income tax made up 53.5 per cent of total tax collections in the US.
These financial trends, both in Asia and the US, underline the economic forces that may drive currency movements in the coming years.
Published on May 24, 2025
