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Investing.com -- Bank of America (BofA) FX analysts revised their forecasts for North Asian currencies, expecting a stronger outlook for the Taiwanese Dollar (TWD) and the Korean Won (KRW) amid ongoing trade negotiations and a general trend of US Dollar (USD) weakness.
Since the end of March 2025, the Broad USD Index (DXY) has seen a 3.3% decline, contributing to a rally in Asian currencies, with the KRW and TWD rising 5% and 10% against the USD respectively. The updated BofA currency forecasts reflect a shift from their previous projections.
The firm now predicts the USD/HKD to move to 7.80, the USD/KRW to 28.8, and the USD/TWD to 1,320, adjusting from earlier forecasts of 7.78, 31.9, and 1,380 respectively. This change is driven by the anticipation of increased trade activity and the possibility of currency implications being a topic of discussion in the upcoming negotiations.
The recent performance of the KRW and TWD has positioned them as the top performers in the Emerging Market space. Additionally, the USD/HKD reached 7.75, triggering a significant increase in the aggregate balance and a collapse in front-end HKD funding rates.
These movements in North Asia’s foreign exchange (FX) markets are linked to the trends of de-dollarization and heightened USD hedging by Asian investors.
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