East Asia Econ

Last week, next week

Events in Japan in the next couple of weeks will likely be critical for the region. If a combination of a strong US jobs report and equivocal BOJ meeting push $JPY through 160, KRW and TWD will likely be dragged higher too. The implication would be higher inflation, and more pressure for rate hikes.

Paul Cavey

Jun 8, 2026 • 6 min read

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East Asia Today

Lots today – initial observations from a big database I've been building on regional auto flows, a note on the KRW and today's BOP data, a short piece on today's higher inflation data in Taiwan, and charts on strong consumption in April and other secondary data from Japan.

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Taiwan – services inflation back at 2.5%

Services inflation averaged 0.7% in the 20 years before 2020. In the last five years it has been 2.3%, and is now rising again. Some of that reflects energy prices, with air fares rising 10% YoY in May. But there is also the backdrop of a strong economy, rising stockmarket and rising wage growth.

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Korea – the all-weather weakness of the KRW

KRW weakness was blamed on USD strength, then CNY weakness, then JPY weakness. Flows have gone from NPS, to domestic retail, to foreigner institutional. These rationalisations feel a bit like moving the goalposts. But weak KRW does have implications, one likely being a more hawkish BOK.