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The macro narrative across ASEAN-6 economies has become more balanced in 2H26. While growth remains uneven and global uncertainties have not fully dissipated, reduced FX pressures and lower-than-feared inflation have improved policy flexibility across much of the region. Central banks will likely safeguard domestic demand without undermining currency stability.
ASEAN-6 currencies have partially recovered from their lows in 3Q26. Indonesia’s BI is a case in point. BI tightened its policy rate by 100bps in 2Q26 in response to rupiah underperformance, driven by domestic stress points and the Middle East crisis. Since then, easing concerns over policy uncertainty, currency stability, and affirmative remarks on the fiscal outlook have allowed the central bank to slip into a pause. We remove the last 25bps hike in our baseline forecast for 4Q26. Local news reports cited small protests around parliament on Thursday, marking roughly one year since last year’s demonstrations, dampening onshore sentiments at the margin. The Philippines’ BSP hiked its benchmark rate by 25bps to 5.0% yesterday, in line with our expectations (see note), in a bid to contain inflation expectations and support the currency. The peso is the only ASEAN-6 currency to have underperformed so far in 3Q26 (-0.8% vs the USD), while the others have appreciated by 0.9-1.7% over the same period. On a YTD basis, SGD, MYR, and VND are in the green vs the USD, while the THB (-4.0%), PHP (-4.9%), and IDR (-5.8%) slipped.
For Singapore’s MAS, back-to-back policy tightening, albeit smaller in July than in April, has supported the SGD NEER within the upper half of its appreciating policy band. The current monetary policy stance appears to be in a good place to dampen and manage rising imported-driven inflation amid a resilient economy. For Thailand’s BOT, the need for a monetary policy response to mitigate currency-related risks remains limited given strong external buffers. The policy rate will likely remain accommodative and stable, balancing uneven growth against inflation that has risen but within target (see note). For Malaysia’s BNM, the ringgit's resilience this year reflects strong economic fundamentals, and policy efforts to encourage capital inflows. Coupled with a monetary policy stance that remains conducive to support continued robust growth amid ongoing price stability, this points to an extended pause next week. For Vietnam’s SBV, currency stability has enabled policymakers to focus on growth ambitions despite elevated inflation.
Our baseline view is that ASEAN-6 central banks will remain on hold through the rest of 2026, with the Philippines as the sole exception. Above-target inflation leaves open the possibility of one final, measured BSP rate hike. The primary risk stems from the external backdrop, spanning a resurgence in energy prices to stronger USD and rates dynamics, as well as equity market jitters. Such developments could bring BI and the BSP back into the tightening conversation first, while other central banks would respond more gradually.
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