A depreciating US dollar could have an immediate impact on export-focused sectors in many countries, as well as banks with significant lending to them, according to S&P Global Ratings.
“The most immediately exposed sectors and geographies are those where a weaker US dollar could strain volumes and revenues or compress margins, especially if they are exposed to US tariffs and lack a production footprint in the US,” said credit analyst Xavier Jean.
“Financial institutions with meaningful corporate lending to export-oriented small to medium-sized enterprises [SMEs] could see pressure on their asset quality.”
This is particularly the case for the Thai, Taiwanese and Cambodian banking systems.
Exports contributed to nearly 60 per cent of Thailand’s gross domestic product, with exports to the US representing about 20 per cent of the GDP, S&P said, citing recent data. For Taiwan and Cambodia, which were also highly dependent on exports of goods and services, exports to the US accounted for about 20 and 40 per cent of their total exports, respectively. A significant number of exporters in these regions were SMEs.
The US dollar has fallen from a peak in January when President Donald Trump returned to office and slapped tariffs against US trading partners. The US dollar index has dropped 9.7 per cent since a peak on January 13.
