Rupee and rupiah take a hit, signs of resilience elsewhere

Asia has borne the brunt of the EM currency sell-off this month with the Indian rupee and Indonesian rupiah the worst performers in the emerging world. The currencies of Thailand and the Philippines have struggled too. But some Asian currencies have actually performed rather well. In particular, the Korean won and Taiwan dollar have held their ground, making them the two best-performing floating EM currencies since August’s sell-off began. Their resilience is explained by two factors. First, both countries run current account surpluses, which makes them less vulnerable to a reversal of capital flows. Second, they are both trade dependent economies with close links to the US, which means they have more to gain from the continuing recovery in the US than economies in South East Asia.