The Unraveling Dollar: Ju Wang on Asia's Currency Crossroads in 2025

The Asian foreign exchange (FX) landscape in 2025 has become a battleground for geopolitical tensions, de-dollarization ambitions, and volatile market speculation. BNP Paribas’ Ju Wang, a leading voice in FX strategy, has warned that the region’s currencies are experiencing “dramatic” fluctuations, driven by forces far beyond traditional economic fundamentals. From Taiwan’s dollar surging 9.34% against the U.S. greenback to China’s yuan hovering near seven-year lows, these movements reflect a seismic shift in global financial power—and a growing crisis for investors.

The De-Dollarization Dilemma

Wang’s analysis centers on a critical paradox: while Asian currencies are gaining ground against the U.S. dollar, the region’s reliance on dollar-denominated assets remains unshaken. “The absence of viable alternatives to U.S. markets is forcing investors into a bind,” she explained. Even as the dollar’s dominance erodes, portfolios remain anchored to Treasuries and greenback assets, creating a “de-dollarization without alternatives” scenario. This disconnect has fueled extreme volatility, as seen in the Taiwanese dollar’s historic 9% surge over two trading days—a move driven by exporter conversions and insurer hedging, not central bank intervention.

The stakes are high. reveal how Taiwan’s currency, a key barometer of U.S.-China trade dynamics, has become a target of “Plaza Accord 2.0” speculation—a reference to the 1985 coordinated intervention that weakened the dollar. Wang argues that currencies tied to large trade surpluses (like Taiwan’s) face heightened risks of being pressured to depreciate as part of a broader rebalancing. Yet Taiwan’s central bank has denied any explicit currency talks, leaving markets to speculate.

The Yuan’s Fragile Stability

Meanwhile, China’s yuan (CNY) has been buffeted by conflicting forces. Wang projects the USD/CNY pair to approach 7.5 by year-end 啐2024, citing the People’s Bank of China (PBOC)’s reluctance to aggressively stabilize the currency. With Beijing prioritizing economic growth over exchange rate control, the yuan’s decline reflects weak domestic demand and the widening U.S.-China yield gap (now over 300 basis points).

The PBOC’s “moderately loose” monetary stance—evident in 450 billion yuan medium-term lending facility injections—has done little to stem depreciation pressures. Wang warns that delayed rate cuts or reserve requirement ratio reductions could amplify volatility, especially if U.S. tariffs on Chinese exports intensify.

Geopolitical Crosscurrents

Wang’s analysis extends beyond economics to geopolitics. She notes that U.S. demands for China to allow the yuan to appreciate have collided with Beijing’s resistance, creating a “divide that could fuel competitive devaluation.” Hong Kong’s massive $15 billion currency intervention to defend its dollar peg in late 2024 underscored the spillover risks of these tensions.

For Taiwan, the stakes are existential. A stronger TWD—driven by speculative inflows—threatens export competitiveness. Wang calculates that every 1% appreciation of the TWD reduces Taiwan Semiconductor Manufacturing Co.’s (TSMC) operating margins by 0.4%, despite robust AI-driven chip demand. This highlights the paradox of a currency surge in an export-dependent economy.

Investment Implications

1. Diversification Challenges: With no credible dollar alternatives, investors face heightened risk. Wang urges caution in overexposing portfolios to single currencies or regions.
2. Policy Watch: Monitor PBOC moves closely. A delayed rate cut (e.g., a 15-basis-point MLF reduction in early 2025) could push the yuan toward 7.5.
3. Hedging Strategies: For firms exposed to Asian currencies, Wang recommends dynamic hedging to offset Plaza Accord 2.0 risks.

Conclusion: Navigating the Crossroads

Ju Wang’s analysis paints a clear picture: Asian currencies are at a crossroads, caught between de-dollarization trends and structural dependencies on U.S. assets. The Taiwanese dollar’s 9.34% surge and yuan’s projected decline to 7.5 by end-2024 underscore the fragility of this balance. Investors must prepare for more volatility, driven by geopolitical negotiations and central bank inaction.

The data is stark: Asian currencies have outperformed the dollar by 6% year-to-date, yet 70% of emerging-market bond issuance remains dollar-denominated. This mismatch suggests that the “Plaza Accord 2.0” scenario is not just speculative—it’s a looming reality. For those navigating these waters, the lesson is clear: in an era of de-dollarization without alternatives, caution and agility are the only safe bets.

In short, Asia’s FX markets are no longer just about numbers—they’re the front line of a new global financial order.