Won Gains 4% as Asian Currencies Split on Chip Exports
South Korean won up 4% against dollar since late July. Philippine peso hits record low. Semiconductor exports drive divergence.
The South Korean won has appreciated more than 4% against the U.S. dollar since late July. The Philippine peso fell more than 2% over the same period. The peso hit a fresh record low on the 17th. It briefly traded in the upper 62-peso range per dollar. The Indian rupee also dropped to an all-time low. It reached the upper 96-rupee range in late July. These moves occurred despite a broad oil price shock.
Asian currency markets are diverging along semiconductor industry lines. The won and Taiwan dollar are strengthening. The rupee and peso are weakening. The driver is semiconductor export competitiveness. This factor offsets energy import costs. Oil prices rose after strikes on Iran. Currencies initially wobbled in unison. They have since moved in opposite directions based on chip exports.
Chip Exports Offset Energy Costs
South Korea's August exports reached $98.25 billion. This is a 68.7% year-over-year surge. Semiconductor and memory chip exports led the increase. Taiwan exported $82.4 billion in the same period. This figure is up 41% and sets a monthly record. Singapore and Malaysia currencies also strengthened. Their semiconductor-related exports have increased recently. Data from the U.S. Observatory of Economic Complexity confirms this trend. Countries with strengthening currencies are top chip exporters.
Foreign Capital Flows to Chip Hubs
Foreign direct investment is flowing to semiconductor powerhouses. South Korea reported $14.28 billion in FDI in the first half of this year. This is a 9% increase from last year. Taiwan recorded $8.9 billion in FDI. This figure represents a 21% surge. Inflows accelerated after July. Samsung Electronics and SK Hynix announced factory plans worth ₩800 trillion. This equals approximately $578.4 billion. Nomura Securities notes capital flows on growth expectations. The Philippines is the world's eighth-largest chip exporter. But chips are only 3% of its total exports.
Energy Import Burden Weakens Currencies
India and the Philippines face currency pressure from energy imports. West Texas Intermediate crude topped $106 per barrel. This is the highest level since mid-May. Higher energy import dependence increases depreciation pressure. The rupee and peso struggle against rising crude costs. Policy rate differentials do not rescue these currencies. The trade balance deteriorates as oil prices rise. Semiconductor exports are too small to offset this cost. The won and dollar benefit from export revenue. The peso and rupee suffer from import bills.
