Asian FX Undervaluation dormant
Asian FX Undervaluation is a macro theme formerly tracked by Themic. macro commentators' framework that CNY/KRW/TWD are ~20%+ undervalued, sustained by 'FX laundromats' — quasi-government entities (not central banks directly) buying foreign exchange to suppress the currency, mirroring China's model. The theme went dormant after 2026-06-27 and is no longer actively updated; its dated ledger is preserved below as an archive.
Thesis (as of 2026-06-27)
macro commentators' framework that CNY/KRW/TWD are ~20%+ undervalued, sustained by 'FX laundromats' — quasi-government entities (not central banks directly) buying foreign exchange to suppress the currency, mirroring China's model. Taiwan's 4q rolling current-account surplus >20% of GDP, Korea >10%, China at its largest since pre-GFC. France revived 'global imbalances' at the G7, putting it back on the policy agenda. Mechanism: if G7/US pressure forces a KRW/TWD revaluation (~20% implied), Korean/Taiwan export competitiveness compresses and JPY benefits as relative beneficiary. Bears on 6J (JPY-supportive), 6A (AUD via Asia-EM FX linkage), 6E/DXY (global-imbalances debate).
Development timeline
- Jun 27: macro commentators (IIF) reframes the thesis under his own brand with a new transmission claim — CNY/KRW/TWD ~20% undervalued on REER, 'FX Laundromats' (transshipment via third countries) masking the true imbalance; G7 has flagged global imbalances. NEW: he ties it directly to the deflation-trade — Asian-FX undervaluation is the STRUCTURAL OVERHANG that keeps disinflationary pressure alive via import-price suppression, and a CNY-appreciation concession in any trade deal would be material for 6J/6A/EM FX/gold.Sources: independent channels
- Jun 25: macro commentators (Brookings/Substack) sharpens the framework — China's STATE BANKS have replaced the PBOC as the 'FX laundromat' (absorbing surplus dollars to suppress the yuan while official reserves stay FLAT = hidden intervention), explicitly labels 'China, Korea and Taiwan currency manipulators.' Taiwan 4q-rolling C/A surplus >20% of GDP, Korea >10%, China its largest since pre-GFC. France used the G7 to put 'global imbalances' back on the agenda. Near-term flow runs OPPOSITE the thesis: KRW -1.0% (day's laggard), TWD -2.25% overnight, IDR -3.6% on risk-off/dollar strength. Quantification follow-up flagged. Still single-source.Sources: independent channels