Asian currency markets are becoming increasingly powered by artificial intelligence, according to Goldman Sachs. Currencies linked to semiconductor exports and AI supply chains, particularly the Korean won, Taiwan dollar, Singapore dollar and Malaysian ringgit, are outperforming currencies exposed to rising energy costs, such as the Thai baht, Philippine peso, Indonesian rupiah and Indian rupee, the bank highlighted in a report released on Saturday. While the dollar has generally strengthened this year on the back of higher oil prices, a more hawkish Federal Reserve, a stable renminbi, and tensions in the Middle East, Goldman expects intra-Asia divergence to continue unless investment in AI is undermined. The dollar index has risen nearly 3% since the beginning of the year. “The two main factors driving Asian macro markets this year are energy supply shocks and the AI-related investment boom,” Goldman said. South Korea is one of Goldman’s most bullish views. The bank said the country’s AI-driven semiconductor exports are pushing its current account surplus to record levels, and economists expect the country’s current account surplus to nearly double this year to nearly $300 billion, or 13.9% of GDP. A heavy sell-off in foreign stocks weighed on the won earlier this year, but Goldman said those outflows have slowed, reaffirming the won’s strong external fundamentals. “The decline in foreign stock outflows has reduced the offset from the rapid increase in current account surpluses, paving the way for (the won’s) appreciation,” the note said. Taiwan is also a popular market. Goldman expects the Taiwanese dollar to continue to outperform as strong semiconductor exports drive Asia’s largest trade surplus. The bank expects Taiwan’s current account surplus to reach 25% of GDP this year, while exports will expand at a record pace of 40% to 70% through most of 2026. Policymakers are expected to keep interest rates on hold, but Goldman said strong technology exports and large US dollar deposits should continue to support Taiwan. China also stands out. Despite widespread dollar strength, the yuan has been the only currency in Asia to appreciate against the dollar this year. “While China’s economy is being driven by strong performance in high-tech manufacturing and related sectors, overall economic activity remains weak,” Goldman analysts said. Goldman maintained its 12-month outlook for the dollar/renminbi at 6.50, saying that while strong exports and policymakers’ push to internationalize the renminbi should support further appreciation, the currency remains undervalued. Not all technology-related currencies are expected to outperform similarly. Goldman is neutral on the Singapore dollar, saying solid AI-led growth and subdued inflation are supporting the economy, but the Monetary Authority of Singapore remains unchanged, limiting room for further currency appreciation. In a surprise move, MAS tightened monetary policy on Monday. Goldman remains bearish on Thailand’s baht and Indonesia’s rupiah. The bank said Thailand was weighed down by falling gold prices and low real interest rates, while Indonesia continued to face policy uncertainty and governance concerns despite policies aimed at attracting foreign capital. It also expects the Philippine peso to continue to be sensitive to rising oil prices, given the country’s dependence on imported energy. Overall, Goldman maintains its bullish three-month outlook for the Chinese yuan, South Korean won, Taiwanese dollar, Indian rupee and Malaysian ringgit, while remaining bearish on the Thai baht and Indonesian rupiah. The rupee remains under pressure this year, and while not an AI play, Goldman said recent steps by the Reserve Bank of India to attract foreign capital and keep oil prices relatively low should help support the rupee. Goldman is also bullish on the Malaysian ringgit, saying AI-driven resilient growth, strong exports and continued foreign direct investment should support the currency.
