Asia's currency tug-of-war: Beijing brakes, Taipei defends

<p><em>Special Reporting from LSN News, adapted from today's Asia Money Map episode. <a href="https://youtu.be/LB0Eukvx9Zs" target="_blank" rel="noopener">Watch the video on YouTube.</a></em></p>

<p>China's yuan rose against the dollar for 13 straight days, its longest winning streak since 1996. On Tuesday, Beijing stepped in to stop it. A day earlier, Taiwan's central bank stepped in for the opposite reason: to stop its currency falling. Together the two moves show how differently money is flowing across Asia.</p>

<h2>Beijing applies the brakes</h2>

<p>The People's Bank of China said it will raise the foreign exchange reserve requirement ratio by two percentage points, from 4% to 6%, from 15 November. Banks must lock up more of their foreign currency; Reuters calculates the change removes about $24 billion from the market. The onshore yuan weakened as much as 0.37%, to 6.67 per dollar, its weakest since 23 October.</p>

<p>The yuan has gained more than 5% against the dollar this year, according to Reuters, reaching its strongest level since 2022, as exporters sitting on big trade surpluses convert their dollars into yuan. ANZ's Zhaopeng Xing said that has created "excess supply over demand" and called the move largely symbolic. Cindy Keung of OCBC said it is "aimed at moderating the pace of yuan appreciation rather than reversing its direction."</p>

<p>There was a second signal. The central bank set its daily reference rate 661 pips weaker than a Reuters estimate, the biggest weak-side gap since September. Societe Generale notes Chinese stocks just had their worst month in more than a decade.</p>

<h2>Taipei, Seoul and Jakarta defend</h2>

<p>In Taipei the problem runs the other way. The Taiwan dollar slid about 2% in October, Asia's worst performer, as foreign investors pulled record sums out of Taiwanese stocks, according to Bloomberg. On Monday, traders said the central bank called at least four banks and told them exporters' dollar sales would no longer face daily limits. Exporters had generally been capped at about $10 million a day. Eddie Cheung of Credit Agricole said the authorities "could be becoming less tolerant" of a weaker currency.</p>

<p>In Seoul, the Kospi fell 3.6% on Tuesday to 5,649. Samsung Electronics and SK Hynix both fell more than 4%. Foreign investors sold a net 1.5 trillion won of Korean shares in a single day, while retail investors bought the dip. Analysts tied the sell-off to doubts about whether heavy spending on artificial intelligence will pay off. Taiwan's main index also fell 3.6%.</p>

<p>Indonesia's rupiah closed Tuesday at about 18,135 per dollar, weaker than 17,870 at the end of September. Bank Indonesia's Destry Damayanti blamed Middle East tensions, tight US monetary policy and investor sentiment toward emerging markets. The central bank is intervening in spot and forward markets and says its reserves of $146.3 billion are well above the international standard. Some bank economists now expect a rate hike at its 18 November meeting.</p>

<h2>Two flows, not one dollar</h2>

<p>Our read: Asia's currencies are no longer moving as one bloc against the dollar. They are moving with two flows. The first is trade: China is earning so many dollars from exports that its problem is too much money coming in. The second is the AI trade: Taiwan and Korea built their markets on chips, and when global funds question AI profits, that money leaves fast.</p>

<p>Two more pressures sit on top. Brent crude fell 7.6% on Monday as Washington and Tehran signalled openness to talks, and traded near $106 in Asia on Tuesday, relief for oil importers but still an expensive barrel. And the Reserve Bank of Australia raised its cash rate on Tuesday to 4.85%, its highest since 2008, in a six-to-three vote; the Australian dollar slipped below 70 US cents.</p>

<p>Next on the calendar are the US midterm election results, which could move the dollar; Malaysia's central bank decision and Indonesia's third-quarter growth data, both due Thursday; and 15 November, when China's new reserve rule takes effect.</p>

<p>The verdict: Beijing is braking a currency that is too strong, while Taipei and Jakarta are defending ones that are too weak. That is not a dollar story; it is a flows story. While exporters keep earning, the yuan will keep pushing up. While global funds doubt AI, Seoul and Taipei will keep paying for it.</p>

<h2>Sources</h2>

<ul>

<li><a href="https://kelo.com/2026/11/02/china-to-raise-forex-deposit-reserve-ratio-to-6-starting-november-15/" target="_blank" rel="noopener">Reuters via KELO-AM</a></li>

<li><a href="https://english.www.gov.cn/news/202611/03/content_WS6ae98bb1c6d00ca5f9a0e103.html" target="_blank" rel="noopener">Xinhua via gov.cn</a></li>

<li><a href="https://theedgemalaysia.com/node/824340" target="_blank" rel="noopener">Bloomberg via The Edge Malaysia</a></li>

<li><a href="https://www.fxstreet.com/news/chinese-yuan-pboc-moves-to-slow-yuan-gains-societe-generale-202611032006" target="_blank" rel="noopener">Societe Generale via FXStreet</a></li>

<li><a href="https://www.taipeitimes.com/News/front/archives/2026/11/03/2003867049" target="_blank" rel="noopener">Bloomberg via Taipei Times</a></li>

<li><a href="https://www.businesstimes.com.sg/companies-markets/capital-markets-currencies/taiwan-said-ease-exporter-fx-rule-after-record-stocks-exodus" target="_blank" rel="noopener">The Business Times</a></li>

<li><a href="https://www.mt.co.kr/en/stock/2026/11/03/2026110315290532138" target="_blank" rel="noopener">MoneyToday</a></li>

<li><a href="https://www.straitstimes.com/business/asian-stocks-fall-after-us-losses-oil-holds-drop" target="_blank" rel="noopener">The Straits Times</a></li>

<li><a href="https://www.sharecast.com/news/market-report-asia/asian-stock-markets-kospi-hang-seng-shanghai-composite-sk-hynix-samsung-electronics-tsmc-reserve-bank-of-australia--23994670.html" target="_blank" rel="noopener">Sharecast</a></li>

<li><a href="https://finance.aseancoverage.com/news/rupiah-edges-higher-to-close-at-rp18135-against-us-dollar/n3628" target="_blank" rel="noopener">Asean Coverage Finance</a></li>

<li><a href="https://katadata.co.id/finansial/makro/6ae9c3fac3abb/bi-ungkap-3-biang-kerok-rupiah-kian-loyo-dekati-18200-per-dolar" target="_blank" rel="noopener">Katadata</a></li>

<li><a href="https://www.cnbcindonesia.com/market/20261103180951-17-782014/seni-destry-jaga-rupiah-bukan-cuma-intervensi-pasar" target="_blank" rel="noopener">CNBC Indonesia</a></li>

<li><a href="https://mufgresearch.com/fx/asia-fx-talk-3-november-2026/" target="_blank" rel="noopener">MUFG Research Asia FX Talk</a></li>

<li><a href="https://www.rba.gov.au/media-releases/2026/mr-26-30.html" target="_blank" rel="noopener">RBA media release 2026-30</a></li>

<li><a href="https://www.abc.net.au/news/2026-11-03/rba-lifts-interest-rates-november-2026-highest-rate-in-18-years/107340050" target="_blank" rel="noopener">ABC News</a></li>

</ul>