Asia reacts to dollar pressure: Central banks sell reserves while China opens the door to dialogue with the US

A key economic trend observed over the weekend and into Monday is the intervention of Asian central banks to manage the appreciation of their currencies against the dollar . The Hong Kong Monetary Authority (HKMA) purchased $6 billion on Friday to maintain its pegged exchange rate, its first such intervention in five years.

Similar action is expected in Taiwan, whose currency reached historic highs against the USD, driven by strong foreign capital inflows. This sale of USD reserves seeks to moderate the appreciation of local currencies, which, while attracting capital, harms the competitiveness of its exports.

• *China-US : Beijing has officially signaled its willingness to begin negotiations on the tariffs imposed by Trump, provided Washington shows "sincerity" and is willing to cancel the unilateral tariffs. This opening, although cautious, offers a window for de-escalation of the trade war.
• *Singapore : Following the general election (GE2025), in which the PAP won 65.57% of the vote, the ruling party's leaders pledged to learn lessons, focus on unity, and manage global risks. The Singapore dollar also appreciated significantly against the USD. The free trade agreement between Singapore and the Pacific Alliance (initially Chile and Peru) came into effect.
• *Nepal: Political wrangling continues over the appointment of the central bank (NRB) governor, as parliament debates the annual program and calls for an investigation into political arrests emerge.
• *Indonesia: Internal tensions within the armed forces (TNI) following attempts at reorganization. President-elect Prabowo plans to build an "Indonesian village" in Saudi Arabia for pilgrims.
• *Vietnam: Electric vehicle manufacturer VinFast secured a loan from Indonesian banks to finance its plant in Indonesia. The Communist Party leader called for institutional reforms to boost growth.
• * Others: Construction of a large hydroelectric plant began in Laos. A locally manufactured electronic voting machine was tested in Myanmar. ASEAN health ministers aim to eliminate malaria by 2030.

Asian stock markets were limited due to public holidays in Japan, China, Hong Kong, and South Korea. In India, mixed financial results were reported by major companies such as SBI and Kotak Bank (profits down), while DMart posted growth and Azad Engineering landed a major contract with GE.

"Dollar decline fuels 'Sell America' wave," the Indian Express headline describes the trend of Asian banks dumping USD reserves.

Asia is navigating a complex global economic landscape, adapting to fluctuations in the dollar and U.S. trade policies, while addressing its own political and domestic development challenges and opportunities.