The Bank of France expects Asian currencies to be most affected by divergent monetary policies.

As Asian central banks prioritize domestic inflation and exchange rate stability rather than closely following the Fed's cycle, Asian currencies are expected to face new pressures. Chandresh Jain, a strategist at BNP Paribas, pointed out that the Thai baht, South Korean won, and Indian rupee are most affected by rising energy prices, while the Malaysian ringgit and Indonesian rupiah are relatively unaffected. Jain said that regional authorities may tolerate the broad strengthening of the US dollar, but if the exchange rate weakens, it could exacerbate import inflation, prompting them to take action. With rising energy prices and possibly food prices, the second-round effects may test policymakers' resolve and drive Asian countries to a more differentiated policy path.