Related Insights
Regional currencies gained ground on Monday as the US court ruling weighed on the US dollar, with the Philippine peso, Indonesian rupiah, and Thai baht surfacing as the day’s outperformers. The verdict will be significant for the ASEAN-6 countries on two counts. Firstly, unilateral tariffs imposed by the US on the region under the IEEPA are likely to be deemed invalid. Previously, ASEAN-6 countries faced US reciprocal tariff rates of ~19-20%, except Singapore, which was subjected to a lower 10%. These countries will now face their respective MFN rates plus a global 15% tariff under Section 122, which will be in effect until July 2026, but could face legal hurdles in the interim, resulting in continued trade policy uncertainty. Sector-specific tariffs under Section 232 will remain in place, while exemptions covering semiconductors, non-branded pharma etc. will continue to apply. The blanket 15% rate will benefit Malaysia, Thailand, Vietnam, and Indonesia by reducing their effective rates by ~1.7 to 3.2 percentage points (pp) but raise the rate on Singapore by ~1.1pp, according to Global Trade Alert. Despite this, the effective tariff rate on Singapore will be the lowest in the ASEAN-6 bloc.
Secondly, most ASEAN-6 countries were at different stages of finalising trade agreements with the US, where reductions in nominal tariff rates were contingent upon substantial purchases and investment commitments from the region, lower tariff and non-tariff barriers, and providing better market access for US companies. Several agreements also carried penalties to curb transshipments, particularly from China. Indonesia was amongst the latest to finalise a trade deal with the US, shortly before the court ruled against the IEEPA levies. Malaysia was still to ratify the Agreement on Reciprocal Trade at last check, while Thailand is yet to finalise a trade deal with the US. It remains to be seen if the region pushes their US counterparts to revisit onerous parts of these agreements and strike more balanced terms. In all, the court ruling is likely a net positive for market sentiment and trade prospects, with tech-heavy exporters already enjoying the spillover benefits from global demand tied to AI-driven capex spending and semiconductors. Vietnam’s exports of computers, electronic products, and components surged 57.6% yoy in Jan26, while Malaysia’s electrical and electronics shipments accelerated by 39.5% yoy. Singapore’s electronics domestic exports of 56.1% yoy also outperformed weak non-electronics domestic shipments. Nonetheless, domestic markets are likely to trade with caution amid lingering risks of further trade action and geopolitical flashpoints. We maintain our regional economic projections as highlighted here, here and here.
Topic
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates & Digital Assets)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.