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Five best performing Asian currencies

The strength of a currency, measured mostly as its exchange rate with the US dollar, can affect one in many ways. A strong currency can make imported goods cheaper and also enable one to go on a vacation abroad without blowing the budget. On the flipside, it can pose a challenge to export growth by making a nation’s currency expensive overseas (to buy goods from a nation, one needs to purchase its currency using its own).

Ironically, one of the main reasons a currency gains value is a nation’s rising volume of exports which enables it to accumulate forex. Interest rate hikes by central banks, which typically attracts foreign investment, also pushes up the value of a currency by increasing its purchase. Rising gross domestic product (GDP) and balance of trade and lower levels of debt – all indicative of a growing economy – contribute to a currency’s rise as well.

Fulfilling all the aforementioned criteria many Asian currencies have seen stellar rise in the past one year. A weakening greenback owing to the possibility of a trade war sparked by Trump administration’s stance on free trade and also by comments by the US treasury secretary that a weaker dollar will bode well for US exports have positively impacted their values too.

Scroll down to find out currencies of which nations have made phenomenal progress and why.

Malaysia: Malaysian Ringgit

USD1 = MYR3.95

Appreciation against the US dollar from 1 January 2017 to 26 January 2018: 15.9 percent

Riding high on the tailwinds of strengthening economic fundamentals, the Ringgit makes the cut. Surging export demand for electronics, palm oil, wood and rubber manufactured in the nation, rising global oil prices (Malaysia is one of the top oil exporters in South East Asia) and strong performance of financial markets what with overseas investors pouring money into stocks and bonds are said to have catalysed solid economic growth. Additionally, thanks to the business-friendly environment, the country has attracted quite a few big ticket projects from overseas investors of the likes of Alibaba and Saudi Aramco. Those are set to further boost the economy, thereby sustaining an appreciation of the ringgit.

Thailand: Thai Baht

USD 1 = THB 31.87

Appreciation against the US dollar from 1 January 2017 to 26 January 2018: 14.3 percent

Yet another strong contender for the title of the best performing currency in Asia, the Thai Baht has been buoyed by the impressive strides made on the export front in 2017 after a decline for three years before that. The booming tourism has also been a major contributor. Both resulted in a large pile of foreign exchange reserves. Record foreign fund inflows, particularly in the nation’s debt market on account of a weakening greenback, has fuelled the currency’s rise too. In the near term, with upcoming big-scale infrastructure projects such as “Thailand 4.0” to catalyse growth in high-productivity in sectors like aviation, robotics, biofuel, digital and medical technology, the Baht is expected to scale greater heights.

Taiwan: Taiwan Dollar

USD 1 = TWD 29.76

Appreciation against the US dollar from 1 January 2017 to 26 January 2018: 11.3 percent

Factors firming its currency are massive net fund inflows from foreign institutional investors; in 2017 it was to the tune of US$8.6 billion that drove up the currency about 8 percent against the US dollar. In fact, there has been a constant rise of foreign funds in the nation’s stocks since 2007 on account of its promising manufacturing sector. The Asian tiger’s economy and exports have been rising steadily. In 2017, exports went up 13 percent from the previous year to total US$317 billion. This is another reason behind a stronger currency.

Singapore: Singapore Dollar

USD 1 = SGD 1.34

Appreciation against the US$ from 1 January 2017 to 26 January 2018: 10.9 percent

It notched its biggest gain against the US dollar in two and a half years at the start of this year. An expanding economy (measured by GDP increase) brought about by the robust manufacturing sector, which registered a 6.2 percent growth in the last quarter of the previous fiscal year, has been pegged as the main reason behind it. Thanks to it, beating all estimates export volumes rose at a stellar pace too helping the nation increase its stash of foreign currency.

South Korea: South Korean Won

USD 1 = KRW 1,068.00

Despite the possibility of a showdown with its belligerent and reclusive neighbour North Korea, the currency has not been impacted. On the contrary, it appreciated almost 13 percent in 2017. And this is considered its best performance since 2004. Its prospects remain bright in the near future with the Bank of Korea having raised interest rate for the first time in six years in November last year, soaring technology exports and increased demand for its assets.