MUFG senior FX analyst Michael Wan stated in a report on the 5th (local time) that the Korean won would be the biggest beneficiary among Asian currencies if the Japanese yen continues to strengthen. The forecast is based on conditional beta and correlation indicator analysis that controls for Dollar Index (DXY) volatility. This analysis comes amid recent market stabilization driven by US-Japan joint foreign exchange intervention and geopolitical developments affecting risk sentiment in Asian currency markets.
MUFG Analyst Ranks Asian Currencies by Yen Sensitivity
Michael Wan, senior FX analyst at Mitsubishi UFJ Financial Group (MUFG), projected that if the Japanese yen maintains its strength, the Korean won would benefit most among Asian currencies, followed by the Thai baht, Singapore dollar, and Philippine peso in that order. The ranking is derived from conditional beta (sensitivity) and correlation indicator analysis conducted after controlling for Dollar Index (DXY) volatility. A higher beta indicates a greater likelihood of moving in the same direction when the yen strengthens.
Korean Won Shows Rising Beta Over Past Two Years
Most major Asian currencies including the offshore yuan, Taiwan dollar, and Indian rupee have shown lower yen beta since 2025. In contrast, the Korean won exhibited a simultaneous and notable rise in both correlation and conditional beta figures over the past two years. This dual increase distinguishes the won's sensitivity profile from other regional currencies in the analysis.
US-Japan Intervention and FIMA Repo Facility Discussed
Michael Wan assessed that recent joint US-Japan foreign exchange market intervention, along with oil price declines following progress in US-Iran conflict negotiations and recovering risk appetite, contributed to financial market stability. Regarding US Treasury Secretary Scott Bessent's mention of potential expansion of the Foreign and International Monetary Authorities (FIMA) repo facility, the analyst interpreted this as a measure to alleviate medium-term concerns about forced selling of US Treasuries. The FIMA facility allows foreign central banks to borrow dollars from the Federal Reserve using their US Treasury holdings as collateral, enabling liquidity access without direct market sales of the bonds.
Wan stated that "these discussions appear to reflect concerns in the background of joint FX intervention about potential forced sales of US Treasuries from a medium-term perspective," adding that "however, considering the $160 billion in short-term deposits held by Japan's Ministry of Finance (MOF), the need for Japan to directly sell US Treasuries appears limited."
FAQ
Which Asian currency would benefit most if the yen strengthens according to MUFG?
MUFG senior FX analyst Michael Wan stated in a report on the 5th (local time) that the Korean won would be the biggest beneficiary among Asian currencies if the Japanese yen continues to strengthen, followed by the Thai baht, Singapore dollar, and Philippine peso.
What is the FIMA repo facility mentioned by US Treasury Secretary Bessent?
The FIMA (Foreign and International Monetary Authorities) repo facility is a mechanism that allows foreign central banks to borrow dollars from the Federal Reserve using their US Treasury holdings as collateral, enabling them to secure liquidity without directly selling the bonds in the market. US Treasury Secretary Scott Bessent mentioned potential expansion of this facility.
