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Currency Performance vs USD (Pre-War Data)
Comparison of various Asian currencies performance against the USD before recent regional tensions.
Primary Sources
Colombo's Yuan shift signals quiet break from dollar dominance
By Bandula SirimannaView(s): Sri Lanka and China have formalised a framework to settle trade directly in Renminbi (RMB) in an initiative of moving away from a traditional reliance on the US Dollar for its massive trade volume with China. Governor of the Central Bank, Dr. Nandalal Weerasinghe, and the Governor of the People’s Bank of China, Dr. Pan Gongsheng, on the sidelines of the recent International Monetary Fund-World Bank Spring Meetings in Washington underscored the potential benefits of promoting Renminbi-denominated settlements for bilateral trade. This is viewed as a strategic move to ease pressure on Sri Lanka’s foreign reserves by bypassing the US Dollar for Chinese imports. The formalisation of these settlement modalities is expected to accelerate following the positive signals from the Bank of China (Colombo Branch) earlier this year. The process is built on a direct clearing and settlement mechanism designed to bypass intermediary western banks, a senior official of the Finance Ministry told the Sunday Times Business. Chinese Yuan 10 billion (about US$1.4 billion) bilateral currency swap, renewed in early 2025, provides the necessary “liquidity cushion” to facilitate these settlements. Sri Lankan importers can pay for Chinese goods in RMB through local commercial banks. The clearing bank settles these transactions directly with Chinese financial institutions via the Cross-Border Interbank Payment System (CIPS). Exporters to China can receive payments directly in RMB, which can be held in RMB accounts or converted to Rupees, he disclosed. Shifting a portion of the $4.3 billion annual trade with China to RMB reduces the pressure on Sri Lanka’s limited US dollar reserves. Eliminating the “double conversion” (LKR to USD, then USD to RMB) reduces exchange fees and spreads for businesses, he explained elaborating that direct LKR/RMB settlement shields local traders from volatility in the USD exchange rate. Sri Lanka must find ways to earn RMB (e.g. more exports or tourism) to sustain the system without depleting the swap facility. Success in RMB settlement now is critical to building a reserve buffer before major external debt repayments resume in 2028. Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deci...
Asian Currencies Show Divergence | The Reason Why
At a basic level, the post-war currency trends look like a continuation of the pre-war trajectory. Geography mattered a lot for currencies in the last few weeks. Asia depends on the Middle East and the Strait of Hormuz for its oil and gas needs. Disruptions in the region push up energy prices, making transportation, fertilisers, plastics, and ceramics more expensive. The impact goes beyond inflation. Current account balances (exports minus imports) worsen, foreign investors pull back, and governments often step in with higher subsidies.In most cases, this should weaken currencies, especially when the US dollar is strengthening. But the data tells a more uneven story. Currencies are moving in different directions. Those who were strong before the war largely stayed strong, while the weaker ones came under more pressure. That raises a simple question: were these trends created by the war, or were they already in motion?Asian currencies are showing divergencePhoto Credit: Chart by Swapnil KarkareHow the currencies fared before the war Let's rewind to Feb. 27, one day before the war. The split is already visible.On one side:Malaysia (+12% YoY), Israel (+12%), Russia (11%), Thailand (+8%), Singapore (+6%), China (+6%), and Taiwan (+4%) have all appreciated.On the other:India (-5%), Sri Lanka (-5%), Japan (-5%), Indonesia (-2%), Vietnam (-2%), and Korea (-0.4%) are already weakening.This split reflects underlying economic positions.ALSO READ: India Revamps Trade Reporting System, Including Offshore RupeeWhy were certain currencies appreciating before the war?Most of the appreciating currencies had either trade/current account surpluses or a policy supporting the exchange rate.Take Malaysia. 'China+1' strategies worked in its favour as global firms shifted supply chains and capital into the country. That created steady demand for the ringgit (MYR). At the same time, the interest rate gap between Malaysia and the US narrowed, supporting the currency's appreciation.The Taiwan dollar (TWD) gained from the semiconductor export boom, while the Thai baht (THB) benefited from improving political stability and a recovery in tourism.The yuan's (CNY) appreciation was intentional and supported by the Chinese central bank (PBOC), with rising trade surpluses strengthening it. Singapore followed a similar policy-led approach. The Monetary Authority of Singapore uses currency strength as a tool to manage inflation, supporting the Singapore dollar (SGD).Israel, despite the war ...
Sri Lanka Plans to Pay for Russian Oil in Chinese Yuan - Reports
Sri Lanka is planning to pay for future imports of Russian crude oil in Chinese yuan, the Daily Mirror newspaper reported on Thursday, citing the country's new energy minister, Aruna Karunatilake.
China's Yuan Weakens As Dollar Regains Strength Amid Ceasefire
The central parity rate of the Chinese currency renminbi, or the yuan, weakened 15 pips to 6.865 against the U.S. dollar Thursday, according to the China Foreign Exchange Trade System. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
